Abbey, the last major lender to offer 100 per cent mortgages, has announced it will withdraw its product from the market tonight, shattering first time buyers' chances of getting on the property ladder.

The UK's second biggest mortgage lender will stop offering mortgages to those who have less than a 5 per cent deposit from 10pm tonight.

Abbey, which is responsible for one in ten mortgages in the UK, said the change was "a normal approach given the current market conditions," and said it was "in line with recent moves by other lenders."

All major lenders have now withdrawn deals offering to lend home buyers the full value of their property. Borrowers who took out a 100 per cent deal in recent years will also be hit when they come to the end of their mortgage. Instead of shopping around for a new, competitive deal, they will be forced to stay with their existing lender. In many cases they will have to pay their lenders expensive standard variable rate (SVR).

The average SVR is currently around 7.5 per cent.

Two lenders, Bristol & West and Bank of Ireland, still offer first time buyers a 100 per cent mortgage, but only if they enter into a joint agreement with their parents. Three banks in Northern Ireland still offer 100 per cent deals.

Abbey is also set to increase its tracker rates by up to 0.35 per cent, and will cut the maximum loan value on its offset deals from £7.5 million to £550,000.

Barclays, which controls more than 5 per cent of the mortgage market, has also withdrawn nearly all of its popular fixed-rate deals. The lender said it would re-introduce a reduced range of deals on Thursday. It is understood that many of the new mortgages will be more expensive.

Last May, there were more than 120 deals for 100 per cent mortgages on the market, today the only deals available require borrowers to take a joint mortgage with their parents.

Tipton & Cosely Building Society offers a 100 per cent deal, but only to those who live in the Birmingham area.

Mel Bien, of Savills Private Finance, the mortgage broker, said: "This move will make it harder for those with little or no deposit to get on the housing ladder as there is little [available] above 90 per cent now. Those remortgaging who have little equity in their homes will also find it harder."

Abbey launched its 100 per cent mortgage last June. In a letter to brokers, it said it was introducing the deal because "we recognise that many of your clients cannot afford to provide a deposit on a new home, meaning that they are often unable to secure a mortgage. Abbey’s new 100 per cent mortgages provide a solution to this."

Ray Boulger, of John Charcol, another mortgage broker, said: "Presumeably Abbey either no longer recognise this or if they do no longer wish to provide a solution."