The Co-operative Bank took away its two-year mortgage range, however the company has still said it will remain "fully committed" to providing quality mortgages.
John Barker, Head of Mortgages at The Co-operative Bank, said: "We have recently provided a range of very competitive mortgage deals, which have included a number of 'best buy' two-year mortgages.
"This has led to unprecedented levels of customer interest and demand, which has been fuelled further by the recent actions of other lenders to reprice and withdraw their products."
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The number of home loans available has fallen by nearly 40 per cent in the past month.
Mortgages are being withdrawn daily as lenders raise their rates, reduce their loan-to-value ratios and cancel deals that are attracting too much business.
Louise Cuming, Head of Mortgages at price comparison site moneysupermarket.com, said: "This is yet another example of a lender taking action to manage volumes. We are seeing more and more ways of stemming inflow, with each move creating a precedent that can be followed by others.
"Some other lenders have already increased rates or withdrawn products for a few days, or restricted their best rates to lower loan-to-value customers or those within a smaller area. first direct's move marks dangerous new ground for borrowers and will perhaps be followed by other lenders anxious to manage risk and service.
"Borrowers, new and old, may feel the rug is being pulled from beneath them but the vital thing is not to panic and shop around early if you are coming to the end of a fixed rate deal."
(CD/JM)
