Five hundred mortgage products disappear overnight

The rescue of Bradford & Bingley (B&B) has prompted a mass withdrawal of mortgage products from the already depleted UK market.

According to financial website, Moneyfacts, around 500 home loans have been withdrawn since the beginning of this week.

The number of mortgages available for residential and buy-to-let borrowers fell 11% in 24 hours to 3,469. Residential mortgages now number 2,988 while buy-to-let deals total 481.

According to Moneyfacts, 85% of buy-to-let loans and 60% of residential mortgages have disappeared in the past year.

Mortgage providers have been steadily withdrawing products since the onset of the credit crisis but the recent turmoil on Wall Street and uncertainty surrounding the proposed $700 billion bail-out of US banks by the Bush administration has increased the cost of borrowing on the wholesale money markets.

Libor, the rate at which banks lend to one another, has soared and leading lenders including Halifax, Lloyds TSB and HSBC have already increased rates.

While mortgage lending is at an all-time low and the latest figures from the Bank of England showing that net lending fell 98% year-on-year in August, the demise of B&B has put pressure on other lenders.

Nationwide units, UCB Home Loans and The Mortgage Works have both temporarily withdrawn products because of unprecedented demand.

Meanwhile, Halifax, Bank of Scotland Mortgages, Bristol & West Mortgages, Intelligent Finance and Newcastle Building Society have limited their ranges for home buyers.

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