Brokers have attacked Labour’s pre-budget report for failing to do enough for borrowers, amid warnings by a government-appointed expert that mortgage approvals could soon dry up altogether if more isn’t done to boost lending.

Banks have also come under fire for failing to cut interest rates and offer new deals after huge falls in wholesale funding costs, which in recent weeks have reached pre-credit crunch levels.

Libor — the rate paid by lenders to fund variable-rate loans — fell to 3.98% on Friday. However, the average two-year tracker remained 1.27 points higher at 5.15%.

Before the credit crunch, in July 2007, Libor was at 6.11%, 0.10% lower than the average tracker deal at 6.01%.

Last week, there were 89 tracker mortgages available — compared with 618 in July last year, according to figures from Moneyfacts.

Sir James Crosby, former chief executive of HBOS, Britain’s biggest mortgage lender, has warned that net mortgage lending could fall to zero. He called for the government to make another £100 billion available to banks in recommendations published alongside the pre-budget report, as they showed no signs of passing on cuts in funding costs.

Aaron Strutt of Chase de Vere Mortgage Management said: “The cost of funding in the wholesale markets soared during the credit crunch but swaps are now down to record lows and Libor is falling fast. But some of the biggest lenders are still holding out on offering decent trackers.”

HSBC and Northern Rock — which have had some of the most competitive deals — were forced to raise rates after being inundated with business.

Last week, Northern Rock raised rates as it struggled to keep lending within the targets set when it was nationalised in February — it has pledged to limit its share of the market to 1.5%. It raised rates on some fixes by up to 0.3 points. Its recently introduced one-year fix rose to 4.19% from 3.99%.

HSBC, which once offered the market-leading tracker at 3.99% for the full term of the mortgage with a fee of £799 for borrowers with a 40% deposit was forced to pull the deal. Its best tracker is now at 4.64% with the same fee, again for borrowers with a 40% deposit.

A spokesman for HSBC said: “We can’t take the full burden of new mortgages. We were getting four times as many applications as we could process.”

Royal Bank of Scotland has only two tracker loans. Halifax’s two-year trackers demand a 40% deposit.