Specialist mortgage lender Magellan Homeloans has closed for new business with immediate effect.
The lender said it made the decision in response to competitive pressures, as it’s recently seen a number of lenders reducing interest rates and increasing credit risk despite increased funding costs, which it branded ‘unsustainable’.
Magellan added that it has reluctantly taken this decision after considering a number of alternative options.
Decisions in principle and applications in the pipeline will not be progressed any further.
However, it will continue to honour unexpired mortgage offers, although these will not be extended or materially varied.
Matt Gilmour, chief executive, said: “The competitive landscape has continued to shift, mortgage loan interest rates are reducing when the cost of funding is rising, and some lenders are taking on more credit risk despite the volatile economic backdrop.
“Magellan has prided itself on maintaining excellent credit standards whilst helping customers who have been disenfranchised by high street lenders. However, we do not wish to compete in a market which we view as unsustainable.
“The determination, commitment and tenacity shown by everyone at Magellan Homeloans has transformed our business into a mortgage lender to be proud of. It is with great regret and sadness that the Board has concluded that it is no longer a long-term viable business.”
Mortgage applicants who have paid administration or valuation fees to Magellan but who have not received a mortgage offer will have those fees refunded. Magellan said it will only contact applicants in relation to refunding fees if their application is not proceeding.
There will be no impact on existing customers whose mortgage loan has completed. All their contractual obligations still apply and their home may be repossessed if they do not keep up repayments on their mortgage.
Applicants impacted by this announcement should contact their mortgage broker, with whom Magellan will, within the next two weeks, seek to make arrangements where a refund of fees is due.
Existing borrowers will continue to be contacted via normal channels.
The status of all affected pipeline cases will shortly be updated on the Magellan Hub. Intermediaries with any queries should contact Magellan through their regional sales manager, regional account manager or the helpdesk.
A 30-day consultation period will commence shortly for its 65 employees dedicated to new business in its Leatherhead and Birmingham offices. Employees of its third-party customer services providers are not affected by this announcement.