Barclays has announced that FirstPlus is to cease all new lending of its homeowner loans in the wake of the credit crunch and the fall in the housing market.
FirstPlus is to cease all new lending of its homeowner loans after it announced that new business had all but dried up in the wake of the credit crunch and the fall in the housing market.
The company, owned by Barclays, lends money to customers with impaired credit histories and was controversially advertised by TV star Carol Vorderman. However, its business model secured loans on house value and in a falling market this meant many loans had become essentially unsecured.
FirstPlus said it will continue to manage the loan book of its 128,000 customers, but will not be seeking new ones. It said that the move will lead to 300 jobs cuts at its Cardiff office.
Managing director Neil Radley blamed "slowing demand" for the end in new lending and told the Telegraph: "In the past year we have tried a whole range of activities to develop our business but the market demand simply isn't strong enough."
Barclays acquired FirstPlus in 2000 with its £5.4bn takeover of the Woolwich.
The paper reports that Barclays had been trying to find a buyer for the business last year but failed to find a buyer who would pay a premium to the value of its loan book.
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