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First-time buyers have been frozen out of the mortgage market after banks withdrew dozens of deals for customers with small deposits.
Few mortgage companies have been willing to offer loans to customers with a 10pc deposit since the start of the coronavirus crisis.
A handful of banks returned to the market once lockdown measures were eased, but these providers have since been overwhelmed with customers because there are few other options in the market.
Virgin Money, Clydesdale Bank and Accord Mortgages, which is part of Yorkshire Building Society, have now pulled all their loans for customers with a 10pc deposit.
Accord said it had experienced its two busiest days in 17 years of business.
Industry experts said mortgage firms may also be reluctant to take on customers who are perceived as risky in the current economic climate, choosing to concentrate on borrowers with more cash instead.
HSBC is currently the only major provider which is offering loans to customers with a 10pc deposit. However, industry experts have warned that only a small number of deals are available each day from the bank.
Chris Sykes of Private Finance, a mortgage broker, said: “A very small number of these mortgages are released per day at 8am and are gone by 8.30am.”
Some local building societies also offer loans to customers with 10pc deposits, however these deals are often restricted to existing customers or those purchasing properties in the local area.
The Chorley, Ipswich, Melton Mowbray, Penrith and Scottish building societies are among those who remain in this market. However, the pressure is also mounting on smaller firms with Furness Building Society also withdrawing its range of 10pc deposit loans this week.
The lack of options could leave first-time buyers or movers without access to mortgages at a critical time for the housing market.
Mr Sykes said the reason for the withdrawals was that many banks were still grappling with reduced capacity as staff worked remotely and applications took longer to process.
“Lenders are also trying to avoid taking on riskier propositions,” he added. “They’re making loans more difficult to process and less attractive to riskier borrowers.
“An already restricted market has become significantly more restricted and very few options remain for first-time buyers and small deposit borrowers.”
There are currently no mortgages available for buyers with a smaller deposit than 10pc of the property’s value.
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