first direct starts selling mortgages again

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by Kay Murchie

On April 1, internet bank first direct withdrew all its mortgage products as it tried to clear a backlog of customer applications.

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

The bank, which is part of the HSBC banking group, has now announced it will resume selling mortgages again to new customers and said it could now handle new applications after clearing its backlog.

Chris Pilling, the bank’s chief executive, said his staff had processed a year’s worth of applications in just 3 months.

Last month we took the bold decision to withdraw from mortgage sales to non-customers to allow us to process the huge number of enquiries we had received, added Mr Pilling.

We’ve now assessed all the loan applications outstanding from 1 April and earlier and let everyone know the outcome, concluded Mr Pilling.

Following the credit squeeze, many lenders have tightened their lending criteria. Alliance & Leicester and Scottish Widows both curtailed their product ranges while crisis-torn Northern Rock recently set its new mortgage rates at uncompetitive levels, in a conscious effort to drive away new business.

A recent report by Moneyfacts revealed that there are now 3,847 mortgage products available (including residential, sub-prime and buy to let), compared to 4,054 a month ago and 15,599 in July 2007.

The Bank of England plans to ease the situation by making billions of pounds available to commercial banks in the form of special loans.