One of the UK’s biggest lenders is refusing almost a third of mortgage applications, The Times has learnt. Lloyds TSB, which is one of the three banks set to be part-nationalised by the Government, turned down 30 per cent of borrowers with deposits of 25 per cent or less at the end of the September.

In a note to brokers, the bank gave warning that its credit scoring criteria was now "tougher to pass" and small details on applications - such as the lack of a home telephone number - could now make the difference between an application being accepted and declined.

The tougher rules come as Financial Services Authority figures showed the number of repossessions in the UK increased by 71 per cent in the three months to June, with 11,050 people losing their homes. There were 6,476 reposessions in the same period last year.

Abbey, the mortgage bank owned by Spain's Banco Santander, has seen a sharp rise in the number of repossessed properties on its books. At the end of September the lender was holding 802 repossessed homes, a jump of over a third since June.

The Government had told banks to help borrowers at risk of repossession to meet their mortgage repayments.

Ray Boulger, of John Charcol, the broker, said: "In the current climate lenders are looking for reasons to decline applications, particularly those from borrowers asking for loans worth over 75 per cent of the property's value. Lenders are tweaking computing credit scoring criteria so that more borrowers are excluded, and if the computer says no, it cannot be overruled."

In a further blow to struggling homeowners, Lloyds TSB has banned customers of C&G, one of its mortgage brands, from switching to cheaper interest-only deals - cutting off a vital lifeline for borrowers who are finding it difficult to keep up with more costly capital repayments.

The move came despite new government rules, which state that lenders must examine all options before attempting to repossess those who have fallen into arrears.

C&G last night tried to play down the move by insisting that borrowers who are struggling with repayments would still be considered for an interest-only deal.

However, new borrowers wanting a loan for more than 75 per cent of a property's value would still be denied the interest-only option. Lloyds’s decision follows similar action by Woolwich, the mortgage lender owned by Barclays, and Abbey, which have also stopped new customers with a deposit worth 25 per cent or less from switching to interest-only deals.

Monthly payments on a £150,000 mortgage at a rate of 6 per cent would be £966.45 under a repayment deal, but only £750 if the mortgage was interest-only.

Francis Walker of the Consumer Credit Counselling Service, a debt charity, says: "This is very disappointing and not in the spirit of the pre-action protocol announced by the Government last week.”