The mortgage market lost 935 products on Tuesday – the highest daily fall in available mortgages registered by Moneyfacts.

The financial information provider said that, as of Wednesday morning, there were 2,661 residential mortgage products available compared to 3,961 on Friday morning.

More lenders announced withdrawals of products throughout the day on Wednesday, including Santander and TSB.

Most of the product withdrawals have been on fixed rates, because of the sharp rise in borrowing costs for lenders, and the uncertainty as to how much higher and how quickly these costs could move.

Why is this happening?

Last week’s mini-budget sparked huge volatility in financial markets. It quickly led to a drop in the pound and a sharp rise in gilt yields.

The Bank of England strongly hinted that it will hike its Base Rate yet again (following its seven consecutive increases since December).

What has happened to mortgage rates?

They have already risen significantly since December. At that point the Bank of England Base Rate was a record low 0.1%. As of last Thursday it was hiked to 2.25%, which pushed up mortgage rates.

But following the mini-Budget last Friday they are now rising even more quickly. Plus availability is shrinking, as lenders simply pull their deals to take stock of the wider economy and reprice their products.

And it could get worse. Forecasts of mortgage rates potentially hitting 6% have spooked lenders, borrowers and the financial markets.

That’s because many borrowers could become unable to meet their monthly mortgage repayments at that level.

For every one percentage point increase in your mortgage pay rate, you’ll pay around an extra £50 more a month for every £100,000 of mortgage debt.

That’s an extra £125 a month on a £250,000 mortgage.

The problem is we are seeing much larger increases in mortgage rates than one percentage point. Typical fixed rate mortgages have already doubled, and they are still rising.

Karen Noye, mortgage expert at Quilter, said: “Rates of 6% could prove disastrous for the property market as people simply won’t be able to afford their mortgage payments if they have overstretched themselves.

“This could cause a wave of properties come to market just when demand is drying up. House prices will naturally come down if this happens. However, we are still suffering a severe lack of stock in the market and an ever increasing population of renters wanting to buy so house prices may not see a severe crash but a downturn is very likely in the short term.

“The stamp duty cut will also help keep demand in the market but how much is yet to be seen considering the economic backdrop many people are trying to cope with.”

Robert Payne, director of Bristol-based Langley House Mortgages, added: “Up until recently, I have been optimistic we will not see a housing crash but given what is happening it is now a much more realistic possibility.

“I never thought we would witness such significant rate rises in such a short period of time and the impact this is going to have on monthly payments is going to be unaffordable for many borrowers.”

What should you do?

Firstly, find out what your mortgage deal is and when it ends.

If it’s coming up for renewal in the next six months, you’ll need to start thinking about getting a new deal to avoid reverting to your lender’s standard variable rate (which are usually more expensive and also rising).

Sadly, this new deal is likely to be much more expensive than the rate you are currently paying.

Taking advice from an independent mortgage broker means you can get expert help in finding your next deal. The broker will look at what is available to you from across the market and from your current lender, and they are up to date with the latest product changes.

If you have years left on your current fixed rate product, you can either watch and wait in the hope that interest rates fall before your deal is up, or you can pay a penalty to escape your deal and lock into a new one now. That could cost thousands of pounds.

Importantly, there’s no one-size-fits-all right answer, which is why independent advice is so important in the current market.