The last mainstream lender offering 100% mortgages has dealt first time buyers without a deposit a devastating blow by reportedly axing the deal.

Abbey told reporters it had withdrawn from the deal because of market conditions, despite the deal still being promoted on the bank's website.

"This is normal given the current market conditions and is in line with recent moves by other lenders," a spokesman told the Daily Mail.

The bank has also increased the cost of many of its fixed-term and tracker mortgages.

It comes after Abbey released the results of a survey which found the number of homeowners who would take out a five-year fixed rate mortgage has doubled during the past month to around 24%.

The rise in those wanting to fix for five years was due to borrowers looking for certainty for a longer period because of current problems in the mortgage market following the credit crunch, the group said.

Nici Audhlam-Gardiner, director of Abbey Mortgages, said: "Recent reports about the shrinking mortgage market seem to have had a profound effect on borrowers.

"Not too long ago borrowers felt that shopping around regularly was the way to get the best deal, now homeowners faced with a dwindling number of mortgage deals seem keener then ever to lock themselves into a deal for longer than two years such as a five-year fix."

The UK's fifth largest building society, Chelsea, announced changes to its Prospect range of mortgages for people with impaired credit records.

The group has raised its rates by 0.3% across the whole Prospect range, while it is reducing the maximum loan to value ratio it will lend on to 65%.

It has also withdrew all its Adverse Plus products, which previously lent to people at the higher end of the adverse credit scale.

Copyright © PA Business 2008