First Direct has closed its doors to new customers after the bank admitted being swamped by an unprecedented number of applications for its home loans.

Existing First Direct customers are not affected by the bank's decision and will continue to have access to the company's range of mortgage products.

“We have seen unprecedented demand for our mortgages since January thanks to our highly competitive pricing and the decision of other lenders to raise rates. As a result, we're currently seeing applications running at five times our normal volumes,” explained First Direct's Chief Executive, Chris Pilling.

“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.”

First Direct joins a host of other mortgage providers who have decided to pull out of the mortgage market as it becomes increasingly difficult for lenders to find financing for their products.

Katie Tucker, at mortgage broker John Charcol, explains:

“Any lender with a decent rate has been swamped with business, and this week, as the increasing cost of funding the tracker rates showed no signs of abating, lenders were forced to pull out just to catch their breath,” she said.

First Direct has not said when it will reopen its doors to new customers.

The article First Direct stops mortgages originally appeared on 999 Today