FIRST Direct has announced it is withdrawing its mortgage range from new customers.

The internet and telephone bank said it was temporarily withdrawing its range from 5pm yesterday after receiving five times the usual volume of applications in recent weeks.

First Direct, part of HSBC, said the "unprecedented" level of business it was receiving meant it was taking longer to process applications than it would like.

It added that it had decided to withdraw its range from people who were not already customers until it had cleared the backlog, rather than raise its rates in a bid to discourage borrowers.

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. 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."

A raft of lenders have increased their mortgage rates for new borrowers in recent days due to the ongoing high costs of funding as a result of the credit crunch.