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First Direct withdraws mortgages

In a further sign of trouble in the UK mortgage sector, the First Direct bank has suspended lending to new customers.

According to the firm, the decision was made due to demand for its products that was five times its normal levels.

The move also could reflect difficulties that many banks are having with raising revenue to pass on in the form of loans - with the credit crunch slowing supply of funds on the money markets.

First Direct chief executive Chris Pilling said: "The flood of interest in our mortgages has meant we're taking longer than we'd like to handle applications, especially from non-customers."

He added: "Rather than increase interest rates dramatically to discourage new applications, we've decided to withdraw temporarily from offering mortgages to non-customers until we've cleared the backlog."

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