First Direct withdraws mortgage products

First Direct has closed its doors to new mortgage business, fuelling growing concern that increasing borrowing costs are fast becoming unaffordable for first time buyers.

First Direct has announced that they are presently experiencing an influx of mortgage applications that have caused a massive backlog.  Until the backlog has been cleared, they will not be accepting new applications.  The move was announced as an alternative to discouraging new business by raising interest rates to an uncompetitive level, and is expected to be temporary.

First Direct is the latest in a long line of mortgage lenders who are turning their backs on new business.  NatWest, Scottish Widows, Nationwide and the Norwich and Peterborough Building Society have all tightened their belts in the last couple of weeks - along with countless others over the past six months - raising interest rates and withdrawing products traditionally popular with first time buyers. 

As a result of this shift, the number of new homebuyers entering the property market has fallen by 40% in the last 24 months.  Concern is growing that first time buyers will soon find it almost impossible to get onto the property ladder as their borrowing options dry up and the future of the property market grows increasingly uncertain.  Those that do wish to brave the current market turmoil are finding it harder to find affordable borrowing options as lenders increasingly demand larger deposits.  Those with impaired credit ratings are also finding themselves being squeezed out of the market as lenders look to cut risks by lending only to those with impeccable credit records, leaving more people with fewer avenues of credit available. 

The First Direct Tracker mortgage was one of the most competitive tracker mortgage products on the market.  A good alternative worth considering still currently available is the Halifax 3 year tracker rate mortgage.  This product allows you to borrow up to £500,000 at the start rate of 5.78% (0.53% above current base rate 5.25%).  Minimum deposit of 10% required.  Speak to an independent mortgage advisor for advice on this and other products available.

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