Author: Mortgage News
FIRST Direct, the British online and telephone banking unit of HSBC Holdings Plc, has suspended mortgage lending to new customers after a low-rate home loan caused applications to rise fivefold.
The Leeds, England-based unit of Europe's biggest bank by market value received more applications than anticipated after other lenders withdrew products and increased the cost of loans, said First Direct spokesman Rob Skinner yesterday.
"It's a temporary withdrawal for a matter of weeks until we clear the backlog of applications," said Skinner. "It is not about funding, but about customer service."
The number of mortgage products in Britain, including residential, landlord and subprime loans, has declined by 66 percent to 5,272 since July, according to Moneyfacts Group, the price-comparison provider. Both mainstream and subprime lenders have withdrawn products, said spokeswoman Julia Harris.
First Direct offered a 4.95-percent two-year fixed rate deal, described as "market-leading" by Ray Boulger, senior technical manager at mortgage broker John Charcol Ltd. The most competitive deals are being swamped as the range of mortgages declines, he said.
Mortgage providers like Nationwide Building Society, Britain's biggest customer-owned home lender, have also cut the mortgage product range, said Bloomberg News. Last week, the company said it would stop offering four of its two-year loans.
In 2003, HSBC bought Household International for US$15.5 billion, which lent directly to United States customers with subprime status. It has since trimmed lending at the unit.
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