Mortgages back on for new customers at first direct

20 May 2008 / by Joy Tibbs
New mortgage customers will once again be able to apply for a home loan through first direct, a member of the HSBC group. The company had temporarily frozen new applications because it was unable to cope with such high demand.

According to the online and telephone bank, mortgage applications from new customers were suspended on April 1 because the volume had increased by 500 per cent. First direct mortgage deals for new customers were withdrawn so it could continue meeting the mortgage needs of existing customers.

However, now the bank has cleared the mortgage application backlog from April 1 and earlier, it can now start processing new requests. It claims to have received a huge amount of interest in its home loans from existing customers since April, with applications running at twice the normal level.

Chief executive, Chris Pilling, said: "Last month we took the bold decision to withdraw from mortgage sales to non customers to allow us to process the huge number of enquiries we had received and focus on the excellent service we want to provide for our customers.

"We've now assessed all the loan applications outstanding from April 1 and earlier and let everyone know the outcome. We've honoured the fixed interest rates available when people first contacted us about their mortgage."

New and existing customers can now apply for the following mortgage deals: a two-year fixed-rate mortgage at 5.76 per cent (6.3 per cent APR) with a £499 booking fee and £1,499 arrangement fee and a two-year fixed-rate at 5.99 per cent (6.2 per cent APR) with a £99 booking fee and £399 arrangement fee.

Those looking for longer-term deals can apply for a five-year fixed-rate mortgage at 5.98 per cent (6.2 per cent APR) with a £299 booking fee and £299 arrangement fee; and a 10-year fixed-rate deal at 5.99 per cent (6.2 per cent APR) with a £299 booking fee and £299 arrangement fee.

All mortgages are subject to the company's normal maximum loan to value of 80 per cent, and rates automatically revert to its standard variable rate – currently six per cent – at the end of the fixed term.

In response to first direct's decision to reopen the market for new customers, head of mortgages at, said: "This is welcome news in an otherwise hostile market place. First direct's original stance - made at the start of April - was reflective of a cautious attitude towards the market as a whole. The reversal of the decision demonstrates a growing confidence in the market.

"The news that first direct is reopening its doors comes hot on the heels of Abbey and Nationwide cutting mortgage rates last week and HSBC extending its rate matcher offer. The clouds over the mortgage market are starting to clear, much to the relief of borrowers across the country."

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