Mortgage lenders are set to "turn the tap off" as stricter rules for the market are imposed by the financial regulator.
LMS, a property services firm, said in a report that the level of remortgaging transactions slumped by almost a fifth in March to 19,287, the lowest since 2005.
And this is a hint at what is to come when the tighter lending guidelines off the back of the Financial Conduct Authority's (FCA) Mortgage Market Review (MMR) take effect from the end of April 2014.
"With the onset of the game changing MMR, we've seen lenders tighten up in anticipation and get their systems in place during March," said Andy Knee, chief executive of LMS.
"Remortgaging felt the brunt of these effects with fewer loans due to tighter criteria and a creeping up of mortgage rates.
"This fallout has occurred slightly ahead of the rest of the mortgage market, as house purchase decisions typically take longer. We therefore expect the rest of the market to follow suit in April as lenders turn the tap off."
House prices have soared because supply is so constrained and demand is sharply on the rise.
This is because mortgages are easier to access thanks to low interest rates, the UK economic recovery, and government schemes such as Help to Buy.
There are fears of a bubble because mortgage credit is so cheap. There is the risk of a wave of defaults when the Bank of England finally hikes its base interest rate from the record-low of 0.5% and people's mortgage repayments rise.
But the FCA hopes its new rules will keep a lid on mortgage lending, while the Bank of England said it will use the tools at its disposal to put the brakes on if it feels the housing market is overheating.
"The introduction of MMR and continued debate about a Bank of England interest base rate rise will have significant implications for homeowners and will drastically reduce the offers currently available as has already been shown and the fluidity of the market is tested, further stretching already hard-pressed purse strings," said Knee.