Now home buyers need to stump up 40 per cent deposits to get a mortgage as economic devastation from coronavirus threatens a new credit crunch

Home buyers will now need to stump up 40 per cent deposits after TSB have withdrawn two-year mortgage deals with lower down payments.

Barclays has also ended a range of mortgages for borrowers with less than a 25 per cent deposit and none of the main high street banks are currently offering mortgages for customers with less than 15 per cent equity.

A Bank of England survey has found that banks and building societies expect to clamp down on lending for all borrowers.

It has lead to higher mortgage rates, with buyers having to compete for deals still on the market. 

Home buyers will now need to stump up 40 per cent deposits after TSB have withdrawn two-year mortgage deals at lower sums

Five-year fixed mortgage costs have risen from 2.26 per cent to 2.62 since June on average.

The average two-year deal has risen from 2.02 per cent to 2.38 per cent during the same period. 

Managing director of the mortgage broker Forensic Property Finance Jonathan Harris told The Times: 'First-time buyers and those requiring high loan-to-value mortgages have found it tricky to get finance for a while. 

'Now those with big deposits or similar levels of equity are also being affected.'

Barclays has has also ended a range of mortgages for borrowers with less than a 25 per cent deposit and none of the main high street banks are currently offering mortgages for customers with less than 15 per cent equity

Lenders signed off 84,700 mortgages in August, the most since October 2007, but banks are increasingly concerned about a fall in house prices.

They are also bracing for the Bank of England base rate to be cut from its present record low of 0.1 per cent

Average house prices also hit a record high of more than £224,000, according to Nationwide, as pent-up demand and the Chancellor's stamp duty holiday fuelled a frenzy of activity. 

But economists have consistently warned the revival could come to an abrupt end when unemployment begins to bite.

Lenders signed off 84,700 mortgages in August, the most since October 2007, but banks are increasingly concerned about a fall in house prices

September saw the biggest monthly increase in mortgage rates since 2009 and the Bank of England expects this upward trend to continue over the final quarter.

And the number of mortgages  has fallen from 5,222 in March to 2,300 now, according to the financial data provider Moneyfacts.

The Bank of England survey shows lenders expect them to fall again over the next few months and defaults are also expected to rise at their fastest rate since the financial crisis.

Loans for those with less than a 25 per cent deposit have also dropped from 850 in March to 540 today. 

September saw the biggest monthly increase in mortgage rates since 2009 and the Bank of England expects this upward trend to continue over the final quarter

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: 'We can't necessarily say this is the beginning of the end, because there are things the Government could do to prop up the market, but it's certainly not looking good. 

'Estate agents say it's already tough to get a mortgage, and difficult to keep a lender onside during the ups and downs of a home move.

'With the market tightening, and lenders increasingly sensitive to house price moves, it could make life even harder as we get towards the end of the year.' 

TSB said its decision to end mortgage deals would help it to manage demand and is not permanent.