First Direct withdraws from new lending

First Direct, part of the HSBC group, has temporarily withdrawn all business to new applicants.

The lender says it is experiencing unprecedented demand for its range of mortgages, with applications at five times usual levels.

First Direct chief executive, Chris Pilling, explains: “The flood of interest in our mortgages has meant we’re taking longer than we’d like to handle applications, especially from non-customers. 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.”

The news comes as UK mortgage providers are withdrawing products or raising interest rates on an almost daily basis.

The continued turmoil on the money markets has meant that Libor (the interest rate at which banks lend to one another) is currently above 6% for three-month money, making it uneconomic for some lenders to continue to offer mortgages.

First Direct is the first major lender to withdraw its entire range to non-customers.

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