Bank that sparked market alarm by closing doors on borrowers is ready to lend to new home loan customers again
First Direct is to reopen its doors to new mortgage customers, seven weeks after sparking alarm in the market by announcing a freeze on home lending to new customers.
The HSBC subsidiary was forced to close its doors on 1 April by a deluge of mortgage applications drawn by its relatively attractive offers compared with other banks and building societies.
UK mortgage lenders had been raising interest rates, fees and deposit requirements for some months, with the withdrawal of the more attractive offers tending to cause a rush of applications for the next best deals still available.
The bank has now caught up with the backlog, having honoured the rates on offer at the time of each application, and revised the terms of its mortgage products.
First Direct’s April announcement of its temporary freeze accelerated the rate of withdrawal and repricing of mortgage offers that was already happening across the market. However, the Bank of England’s interest rate cut later that month has since improved the situation to some degree.