The number of mortgage approvals plunged more than 7% in April as the Mortgage Market Review depressed activity.
Some 71,238 people were approved for a mortgage or remortgage in April, down from 75,853 in March, according to latest monthly figures from the British Bankers' Association.
This was 7.2% below the six-monthly average of almost 76,800.
Despite the fall in approvals, April saw the highest monthly gross lending since August 2008, up 52% on a year ago.
There was only a 25% increase in house purchase approvals over the year.
Total new borrowing in April was £12.2 billion.
Jonathan Harris, director of mortgage broker Anderson Harris, said while confidence in the housing market remains high, MMR has undermined activity.
"The actual number of mortgage approvals for house purchases was 42,173, down from 45,045 the previous month and below the six-month average of 45,720.
"This is not a market running away with itself.
"The MMR may be having an effect. While it's still early days, with many lenders introducing the new rules weeks ahead of the official launch, its impact may already be starting to be felt.
David Newnes, director of Your Move and Reeds Rains, said the mortgage market is clearly undergoing a period of adjustment.
"But it would be premature to assess the full impact until the dust settles from the regulatory shakeup.
"The MMR only recently implemented more stringent borrowing conditions, alongside tighter stress-tests and affordability checks from lenders.
"And now we are also seeing banks such as Lloyds place their own limitations to regulate home loans. But there is no reason for this to dent the confidence emanating through the property market.
"In the meantime mortgage lending is continuing its firm recovery, particularly at the lower end of the market, traditionally the realms of first-time buyers.
"In April we saw 48% more high-LTV loans than a year ago.
David Brown, commercial director of LSL Property Services, said: "British banks have faith in the property market. Such an increase in mortgage lending demonstrates this beyond doubt. But while good news, this turnaround is not the whole picture.
"Numbers matter just as much. And the number of people moving into new homes is not growing as quickly as the 52% headline figure might suggest.
"Too much of a focus on the total value of mortgages could ignore the subtle, but potent trend when measured by approval volumes.
"This matters - the supply and relative affordability of homes must improve.
"We need to think about enabling the building of more new homes on a different scale to help balance supply with demand."
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