Owing to “unprecedented demand”, First Direct has temporarily withdrawn offering its mortgages to non customers. However, it will continue to progress all existing mortgage requests from new customers.
The HSBC subsidiary said it has been experiencing huge demand for its products, seeing five times the number of applications than they would normally. First Direct is therefore concerned about its service levels as it has been taking much longer to handle applications recently because of the interest.
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Managing money and service levels has become an issue for lenders. Other providers have put up their interest rates to discourage borrowers applying for a mortgage but rather than do this First Direct decided to stop offering its mortgages to those who aren’t customers “until the backlog has been cleared up”.
Thousands of mortgage products have been removed from the market in recent months as it becomes uneconomic for some lenders to offer them. This does not mean that they have a problem like Northern Rock, just that the extra demand was not budgeted for; raising money between banks has become more expensive; and the organisation’s systems and staff may not be able to cope with the increased demand.
Bath and Earl Shilton building societies took the same step as First Direct last month and Nationwide has just put its rates up to control demand for its products. Even the Halifax has admitted it is days behind just opening the post!
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Date: 2nd, April, 2008
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