The big squeeze on household credit is hurting Britain's army of personal financial advisers, who face a sharp downturn in revenues as lenders withdraw products and close the door to new customers.

Two thirds of the nation's mortgages are sold through independent financial advisers (IFAs) and mortgage advisers, and turmoil in global credit markets is hitting their businesses.

Adrian Kidd, of Unleash Advice Partnership, said: “It's an absolute disaster and a minefield out there at the moment. Companies are pulling stuff from the market every day now. Brokers don't seem to want anything over £1million on their books.”

There are about 30,000 IFAs and a further 30,000 mortgage advisers, but a rapid retreat by lenders from the market has reduced mortgage products available to the advisers from 15,000, a year ago, to only 4,500.

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The loss of product is undermining a pillar of the personal finance business. Typically, IFAs generate 30 per cent to 50 per cent of their income from mortgage advice, accounting for two in every three mortgages sold in the UK, according to the Council of Mortgage Lenders.

Now, about a third of advisers expect mortgage applications to be less than 20 per cent of their business over the next three months, according to Legal & General.

Last week the Loughborough Building Society announced that it would no longer lend money through intermediaries, and the West Bromwich Building Society pulled all its intermediary deals, although it plans to relaunch them this week.

Peter O'Donovan, mortgages manager for Bestinvest, said that the number of mortgage applications had almost halved in recent months, and that 75 per cent of inquiries were about re-mortgaging.

He said: “We are having terrible problems. It's a very difficult market to advise on property at the moment. The time lenders take to process applications has almost doubled.”

Mr Kidd said: “Service standards at lenders at the moment are appalling. Some of them don't seem to understand how to treat customers fairly. Lenders who still have good products on the market don't seem equipped to deal with the number of inquiries.”

Halifax, Britain's biggest home-loans bank, today becomes the latest lender to alter its mortgage products in recent weeks. The bank, owned by HBOS, has raised mortgage rates and penalised customers with small deposits.

First Direct temporarily withdrew all its mortgage range from new customers last Tuesday after receiving five times its usual applications.

Richard Farr, director of the Association of Mortgage Intermediaries, said: “Lenders are withdrawing products from the market ... but it is essential that they endeavour to keep their distribution channels open and ensure a healthy intermediary market remains in place.

"Among our members, 40 per cent are currently seeing mortgage withdrawals after they have applied for, or been offered, a mortgage.

“With over 100,000 people coming off fixed-rate loans in the next year, they may find the mortgage market a much tougher place to get a good deal.”