|PIC1|HSBC-owned bank First Direct has withdrawn mortgages for new customers to clear a backlog after people flocked to the bank's relatively cheap rates as other lenders withdrew offers due to the credit crunch.

First Direct has stopped offering the mortgages for a short period, not expected to be longer than a few weeks, to clear an administrative backlog after receiving five times the normal number of mortgage applications, a spokesman said.

"We're famed for service and we're not prepared to accept that kind of disruption to our customer service (while having to process the applications)," said First Direct press officer Rob Skinner by phone.

In the last month alone, more than 2,000 residential and buy-to-let mortgage products have been withdrawn, with the number of products on offer dropping to 5,700 from 7,726, website Moneyfacts said last week.

First Direct's most popular offer was a 4.95 percent 2-year fixed rate mortgage, which it last week raised from 4.75 percent.

While the backlog is being cleared, parent company HSBC will step in to offer new customers a 2-year fixed rate mortgage at 4.99 percent, Skinner said.

Some of the country's leading lenders, including HBOS, Nationwide and Lloyds TSB, increased interest rates on their main products last week.