The number of mortgage products available dropped by 23 per cent last week and the Council of Mortgage Lenders has warned that repossessions have soared 50 per cent this year as homeowners struggle with repayments.
Numbers of mortgage products on the market have dropped by 86 per cent since last April 2007.
It is expected that the latest figures will hit hard for first time buyers and those who need more help to buy.
Head of mortgages at moneysupermarket.com Louise Cuming said: "Last week was a grim one in the mortgage market with the number of deals available falling 23 per cent from 4,930 to just 3,785.
"Most of the products that were scrapped last week were sub-prime, highlighting the disappearing options for these borrowers."
According to the Bank of England around 330,000 homes will be unable to keep up with their mortgage repayments in the next three years and the CML predicts that 45,000 homes will be repossessed this year.
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