First Direct reopens door to new customers

Key in lock

First direct has started selling mortgages to new customers again after it managed to clear the backlog that forced it to close its doors back in April.

The online and telephone bank temporarily stopped offering mortgages to new customers on 1 April after receiving five times its normal number of applications.

Chris Pilling, chief executive of first direct, says: "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.”

The move could be a sign that pressures on the mortgage market are starting to lift slightly. Abbey and Nationwide recently reduced the pricing on some of their mortgages, while HBSC extended its mortgage matcher offer.

Halifax is also reducing the rates on its fixed and tracker rates by an average of 0.15%. However, the reductions are for existing Halifax customers only and new borrowers will not be able to benefit.

Louise Cuming, head of mortgages at price comparison site, says: "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 clouds over the mortgage market are starting to clear, much to the relief of borrowers across the country.”

However, some mortgage lenders are continuing to increase the cost of their mortgages. Lloyds TSB and Cheltenham & Gloucester have increased rates by 0.25%. This is the fourth time Lloyds TSB, which owns C&G, has increased rates in two months.