Internet bank suspends mortgage products

Permalink: Internet bank suspends mortgage products
by Kay Murchie

With effect from 5.00pm yesterday, internet bank first direct has temporarily withdrawn all its mortgage products as it tries to clear a backlog of customer applications.

The lender said it will not return to the market until what it is labelling an ‘unprecedented number of applications for its home loans‘ has been cleared.

However, existing first direct customers will still be able to access the company’s range of products.

Chief executive Chris Pilling said we have seen unprecedented demand for our mortgages since the start of the year due to the highly competitive pricing and the decision of other lenders to increase rates. Consequently, we’re currently seeing applications running at five times our normal volumes, he explained.

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, added Mr Pilling.

first direct said it would like to apologise to customers for any delays they may have experienced.

The news follows similar reports that other lenders have withdrawn from the mortgage market. Last week the Council of Mortgage Lenders (CML) said lenders are running out of cash.

Michael Coogan of the CML said problems in the money markets had left its members unable to meet demand, as they effectively ran out of money to lend.

Alliance & Leicester and Scottish Widows have both curtailed their product ranges.

Finally, Northern Rock recently set its new mortgage rates at uncompetitive levels, in a conscious effort to drive away new business.