First Direct withdraws mortgages

[AtW]

First Direct withdraws mortgages

First Direct has temporarily stopped offering any of its mortgages to people who are not already its customers.

The bank, which is part of HSBC, said the withdrawal was to allow it to cope with the unprecedented demand for its range of mortgages.

Many providers have withdrawn mortgages or raised interest rates this year, leaving some smaller banks and building societies unable to cope with demand.

First Direct says applications have been five times usual levels. (AtW's comment: no doubt Norther Crocks customers are trying to switch ASAP)

Historic highs

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

"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."

As a result of the credit crisis, the interest rates at which banks lend money to each other are unusually far above the Bank of England's base lending rate.

That has made it uneconomic for some institutions to carry on offering mortgages and thousands of products have been withdrawn already this year.

First Direct is the first major lender to withdraw its entire range to non-customers, although the Bath and Earl Shilton building societies took the same step last month.

------

Boomed?

[Board Game Geek]

Okay, so there are more punters at the doors, and not enough staff to deal with the administration ?

Solution ? Hire temp staff to help get the customers through the doors, and watch the volume of business grow.

What is the problem ?

[Diver]

Okay, so there are more punters at the doors, and not enough staff to deal with the administration ?

Solution ? Hire temp staff to help get the customers through the doors, and watch the volume of business grow.

What is the problem ?

No problem, although you will probably find that the actual reason for the withdrawal is not a backlog, but a lack of funds to fund new mortgage aps or fear of increasing their mortgage book and ending up in the same boat as Bear Stearns, Northern Rock or UBS etc.

[Sysman]

Whither Northern Rock?

[Diver]

Whither Northern Rock?

That sums it up neatly

[Sockpuppet]

First Direct is the first major lender to withdraw its entire range to non-customers, although the Bath and Earl Shilton building societies took the same step last month.

Wow.

Somewhere from the tulip bucket that I live has made it onto national news. Also where Qdos is based randomly.

Everything had gone full circle. When my parents first bought a house they had to plead with ES building society for a mortgage. Seems we are back there again.

[EternalOptimist]

Okay, so there are more punters at the doors, and not enough staff to deal with the administration ?

Solution ? Hire temp staff to help get the customers through the doors, and watch the volume of business grow.

What is the problem ?

The problem is their business model. They fund mortgages from deposits, unlike NR, which funded them by borrowing. If they had a flood of depositors they would take on the staff.

[milanbenes]

if it gets harder and harder for people to get mortgages and re-mortgage, then,

house prices,

will,

suffer,

unfortunately


Milan.

[PAH]

One solution is for them to raise interest rates on mortgages to make them more attractive to investors, regardless of what the BOE decides to do.

So one way or another, the property market is in for a bit of a long overdue shake-up.

[DimPrawn]

I remember when getting any sort of loan/mortgage was only possible by goveling to a bank manager armed with a suitcase full of payslips and guarantees. And then you had to have a huge deposit and paid an eye watering rate of interest.

Looks like we are heading back to them days.