First Direct suspends mortgage products to new customers

02-04-2008

First Direct suspends mortgage products to new customers
Internet bank First Direct has suspended the sale of all mortgage products in an attempt to clear a backlog of customer applications.

Since 17:00 BST yesterday the HSBC division has blocked all products including its two-year fixed rate offset mortgage from sale to new customers.

Existing First Direct customers, whether in possession of an existing mortgage or not, will continue to be able to access the company's existing range of products.

However, the lender will not return to the market until an "unprecedented number of applications for its home loans" has been cleared.

"We have seen unprecedented demand for our mortgages since January thanks to our highly competitive pricing and the decision of other lenders to raise rates. As a result, we're currently seeing applications running at five times our normal volumes," explained First Direct's chief executive, Chris Pilling.

"First Direct won its reputation for its amazing customer service and our first priority is to ensure we give all our customers the level of service they expect from us."

The decision from the internet company follows a host of other lenders who have also left the mortgage market since the credit crunch began to take a toll on liquidity late last year.

Scottish Widows and Alliance & Leicester both have curtailed their product ranges, while Northern Rock has deliberately been offering unattractive rates to deter lenders.

"Rather than increase interest rates dramatically to discourage new applications, we've decided to withdraw temporarily from offering mortgages to non customers until we've cleared the backlog," continued Mr Pilling.

"I'd like to apologise to customers for any delays they may have experienced and give them my commitment that we'll not rest until we've restored First Direct's normal standards of service."

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