HSBC’s First Direct Stops Home Lending (Bloomberg) (02-04-2008)

April 2 (Bloomberg) -- First Direct, the online and telephone banking unit of HSBC Holdings Plc, has suspended mortgage lending to new customers after receiving five times the normal volume of applications, although its spokesman said this is due to the need to clear an enormous backlog of applications.

Increased funding costs have led some lenders including Alliance & Leicester Group Plc to curtail mortgage lending. Nationwide Building Society, the U.K.'s biggest customer-owned mortgage lender, raised rates on some loans last week and withdrew others after its financing costs rose.

First Direct, which has 1 million customers, said anyone attracted by its 4.95 percent two-year fixed rate offer can obtain a mortgage from HSBC, which offers a similar loan at 4.99 percent. First Direct's existing mortgage customers are unaffected.

Royal Bank of Scotland Group Plc and its NatWest unit became the first lenders this year to raise their variable mortgage rates for existing customers from today, the Financial Times reported earlier.

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 Source: Bloomberg