The number of prudentially regulated lenders ready to extend credit to self-managed super funds continues to dwindle after Westpac said it planned to withdraw from the market niche.In a notification to mortgage brokers on Monday morning, Westpac announced it would stop taking loan applications from SMSF borrowers at the end of the month.The bank will remove from sale its specialist property loan product and prevent SMSF access to business loans to fund purchases of residential and commercial property.The withdrawal from SMSF lending applies across the group's regional banking subsidiaries, after St George last week announced its intention to abandon the controversial lending activity.Westpac's exit follows damning evidence presented to the Hayne Inquiry in April, which revealed how one of its financial planners advised a client with $200,000 in an industry fund account to set up an SMSF, sell her home and take out a loan to buy a million dollar investment property.A Westpac group spokesman did not indicate whether the decision was linked to the royal commission hearings, saying only the withdrawal would "simplify and streamline our self-managed super fund products"."We continually review our products and services to ensure they meet the requirements of our customers," the spokesman said."We will continue to service and support our existing customers."Westpac is also tightening the terms of loan agreements that will apply to its existing portfolio of SMSF borrowers.From 31 July the bank will refuse all requests from SMSF borrowers to switch from principal & interest repayments to interest-only terms.Also, borrowers will no longer be able to extend their interest-only periods when their contracted period expires.Westpac's exit means Commonwealth Bank will be the only major institution lending to SMSFs after July 31. NAB and ANZ voluntarily withdraw from the lending segment in 2015 after the Murray inquiry included a ban on all lending to SMSFs in its official recommendations to the federal government. While the Turnbull Government did not implement the proposed ban, most APRA-regulated lenders have since exited SMSF lending.Only a handful of banks market loans to SMSFs. The list includes AMP Bank, Hume Bank, IMB and Bank First.Non-bank lenders active in the niche include Yellow Brick Road and Mortgage House.According to financial products comparison site, Canstar - Hume, IMB and CBA are price leaders in variable and fixed priced mortgages aimed at SMSF borrowers.