First Direct decides to temporarily withdraw from offering mortgages to non-customers
First Direct has decided to suspend mortgage lending to new customers after being inundated by applications following moves by its rival banks to pull similar mortgage deals owing to volatile conditions in the money markets. The bank - part of the UK’s biggest bank, HSBC, on April 1st made a decision to withdraw all its mortgages to any of the homeowners who were not its existing customers after it got almost five times the normal level of loan applications.
First Direct does not depend on wholesale funding but it stated it had taken the measures for ensuring it could deal with the deluge of applications it had received. The chief executive of First Direct, Chris Pilling, stated: “The flood of interest in our mortgages means we are taking longer than we would like for handling applications, especially from non-customers.”
He added: “Rather than opting to increase interest rates suddenly and dramatically to wean away new applications, we have now decided to withdraw from offering mortgages to non-customers temporarily until we have cleared the backlog.”
He explained HSBC had stepped in for offering mortgages to non-customers. First Direct, he assured, will come back to the market once the backlog is cleared. This could take a few weeks, he said, refusing to set any timeline.