Nationwide, the UK's biggest building society, and Abbey, the third-biggest lender, announced a raft of new rules today that will squeeze out borrowers who do not have a deposit of at least 10 per cent of their property's value, after chopping the maximum loan size from 95 per cent to 90 per cent for the majority of deals.

From Thursday, Nationwide will offer loans for 95 per cent only to existing borrowers or people taking out a three-year, fixed-rate mortgage.

From tomorrow, Abbey will have only one deal left for homeowners with 5 per cent equity — a five-year, fixed-rate deal charging 6.99 per cent interest.

The moves are a further blow to buyers who have not saved up a big deposit, but are expected to hit hardest those remortgagers who do not have much equity in their property, as they face the possibility of being universally refused a deal when they reach the end of their current term, and will be forced onto sky-high rates of interest unless they can find extra cash.

Nationwide also announced that it would reject borrowers with £1 million loans, after cutting its maximum loan size from £1 million to £500,000. It will stop new customers who have deposits worth less than 25 per cent taking out a mortgage on its Standard Variable Rate (SVR).

Many borrowers had been taking out the 6.24 per cent SVR because it had become cheaper over recent weeks than some of Nationwide's fixed and tracker-rate deals.

Meanwhile, Abbey will tighten the rules for borrowers taking out interest-only deals, so that those who do not have any savings but wish to cut their monthly repayments by repaying only the interest they owe rather than the capital, will have to have equity worth at least 50 per cent of their property value.

This will deny thousands of homeowners who are struggling with monthly outgoings the chance to save hundreds a month by switching to interest-only deals.

Experts said that the changes were a response to funding shortages, as well as an attempt to protect the lenders from falling house prices, which are expected to drop by 20 per cent in the next two years.

They said that the new rules were a sign that recent chaos in the mortgage market was not over, despite an injection of £50 billion into the money markets by the Bank of England, as other lenders are likely to follow the lead of Nationwide and Abbey.

The announcements come only days after Halifax, the UK's biggest lender, raised mortgage rates on some deals by up to 0.6 percentage points for the third time in three weeks.

Abbey withdrew deals for 100 per cent that were aimed at first-time buyers only three weeks ago.

Melanie Bien, of Savills Private Finance, said: "Reducing interest-only exposure makes sense if lenders are worried about negative equity because borrowers aren't paying back any of the capital at all so aren't reducing the amount they owe.

"But it will mean that many whose only hope of getting on the ladder is interest-only may find that they can't get the loan they need as other lenders are likely to follow suit."

Nationwide said that it had introduced discounts worth £400 for first-time buyers on three-year deals that are available to those with a 5 per cent deposit.

Abbey said that the changes were "in response to market conditions".