Three lenders have withdrawn their cheap fixed rate mortgage deals following sharp increases in money market rates.

The Woolwich, National Counties and Lambeth building societies all announced they were withdrawing their current fixed-rate loans yesterday.

Other lenders look set to follow suit.

The Woolwich, which is part of Barclays, blamed the move on a 0.7 per cent increase in two-year swap rates, the rate at which mortgage lenders borrow money.

A spokesman said: "During the past week or so we have seen swap rates increase by up to 0.7 per cent.

"We launched new fixed rates last week with funds that would normally last 18 days and they sold out very quickly and that made the current range at those rates unsustainable."

The group was due to relaunch its fixed rate mortgage range today but interest on a two-year fixed rate loan is set to rise to 3.99 per cent from 3.59 per cent.

David Bitner, head of product operations at The MarketPlace at Bradford & Bingley, said: "I would expect all the major lenders to reprice if the swap rates remain around this level for the next couple of days.

"The consumer will see a large difference between some of the best deals on the market and some of the deals coming out now."

He expected rates to remain volatile for the next few weeks and they could easily fall again.

Friday March 21 2003