Hundreds of mortgage deals have vanished from the market this week, as lenders respond to the ongoing inter-bank lending freeze that has been compounded by the nationalisation of Bradford & Bingley.

Moneyfacts.co.uk, the price comparison website, said that about 10 per cent of deals were pulled on Monday because lenders no longer had the money to finance them. The total number of deals fell within hours by 445 to 3,469. Brokers gave warning that there were more rate rises to come. Abbey, Nationwide and Bristol & West, owned by Bank of Ireland, are all expected to withdraw some deals and announce rate increases before the end of the week.

In the past two weeks inter-bank lending has all but dried up and the cost of wholesale borrowing to fund fixed-rate deals has risen dramatically, prompting a string of rate increases.

Landlords have been hit worst so far. The number of buy-to-let deals fell by more than a quarter in the space of 24 hours on Monday, from 662 to 481. Banks have increased rates and further tightened lending criteria, adding hundreds of pounds to the cost of monthly repayments for those coming to the end of their fixed-rate deals.

Jonathan Cornell, of Hamptons International, a broker, said: “Landlords are facing the biggest challenge now than at any point in the last eight years and it's going to be hard work over the next 12 months. There have been some tremendous rates on buy-to-let in the last two years, but some will now face a jump in rates of around 2 per cent.”

Bradford & Bingley, which had been the country's biggest buy-to-let lender, closed Mortgage Express, its specialist mortgage unit, to new business. Birmingham Midshires, the second-biggest buy-to-let lender, and Bank of Scotland, both owned by HBOS, scrapped all fixed-rate buy-to-let deals and raised rates on remaining deals by up to 0.5 percentage points.

Lloyds TSB, which plans to take over HBOS, is to increase rates on its two and three-year deals by up to 0.25 percentage points before the end of the week. Northern Rock has announced rate rises of 0.3 percentage points, while Nationwide Building Society's subsidiaries, UCB and the Mortgage Works, pulled all their buy-to-let deals on Monday.

The sudden exodus came as the Government said it would postpone release of a long-awaited report into the mortgage market by Sir James Crosby, the former chief executive of HBOS, until the turmoil in global financial markets had subsided. The report, now expected in mid-October, will contain recommendations for improving the availability of mortgages.

The best buy-to-let deals

Lender Deal Fee

Cheltenham & Gloucester 2-year fixed 6.04% 2% + £99

Cheshire BS 2 -year fixed 6.69% £1,499

Cheltenham & Gloucester 3-year fixed 6.09% 2% + £99

Bank of Ireland Mortgages 3-year fixed 6.54% 2%

Woolwich 5-year fixed 6.49% 1%, min £1,500

Source: Moneyfacts.co.uk