Bradford & Bingley, the UK's biggest buy-to-let lender, has raised the rates on its mortgage deals by 0.55 per cent today.

The move will come as a further blow to buy-to-let landlords who have seen the number of deals on offer whittled away during the credit crunch.

Many landlords have also seen the value of their investment property tumble, as city centre flats - the popular choice of investment - have fallen faster in value than other types of properties.

Cheltenham & Gloucester, another lender that offers buy-to-let deals, increased its rates twice last month, while CHL stopped offering new mortgages altogether yesterday.

Bradford & Bingley, which is responsible for one in four buy-to-let deals in the UK, denied it was effectively withdrawing from the market, saying that it was responding to moves by its competitors.

"Other lenders have increased their rates too, and some have withdrawn from the market completely. There is a risk that if we hadn't increased our rates that we would have received so many applications that we couldn't keep up a good level of service," a spokeswoman said.

However, the lender has raised rates on its non-buy-to-let range by a smaller margin of up to 0.2 per cent.

The lender, which was this week forced to raise money by selling 23 per cent of its business to TPG, the giant US private equity firm, has been hit hard by the paralysis in the credit markets.

Landlords who want to take out a new 3-year fixed-rate mortgage deal with Bradford & Bingley will have to pay 7.44 per cent for a deal, up from 6.89 per cent if they have a 15 per cent deposit. This new, higher, rate will add more than £850 a year to their mortgage payments.

Those who have a bigger 20 per cent deposit will have to pay 7.19 per cent, up from 6.64 per cent. This is far above the bank rate of 5 per cent.

All rates at Mortgage Express, a buy-to-let arm of Bradford & Bingley, have also increased by up to 0.55 per cent.

There were more than 4,300 buy to let deals on the market this time last year, and now there are just 441, according to moneysupermarket, the financial comparison service.

News of Bradford & Bingley's rate increases came as Abbey, the third biggest lender in the UK said it would only accept up-front payment of arrangement fees on its mortgage deals.

Borrowers who only have a 5 per cent deposit must pay the whole sum, which can by as high as £2,499, if they are to secure a home loan instead of adding it to the sum they are borrowing as part of their mortgage deal.

Borrowers with bigger deposits will still be allowed to add the fee to their mortgage, but will have to pay a £150 chunk of the arrangment fee up front to secure any new deal.