Specialist mortgage lender Magellan Homeloans has closed to new business, stating it no longer wished to compete in an "unsustainable" market.
A 30-day consultation period for the 65 employees dedicated to new business at the lender is due to commence shortly.
Magellan will cease accepting new business with immediate effect and decisions in principle and applications in their pipeline will not be progresses any further.
The lender confirmed it will continue to honour unexpired mortgage offers, although borrowers will not be able to extend or materially vary their loans.
Magellan stated it will refund administration or valuation fees paid by mortgage applicants who have not received a mortgage offer, and asked applicants to contact their mortgage broker with whom the lender will "seek to make arrangements" over the next two weeks.
Existing customers with a completed mortgage loan will not be affected.
Matt Gilmour, chief executive at Magellan Homeloans, said the competitive market landscape had seen loan interest rates reduce when the cost of funding is rising, with some lenders “taking on more credit risk despite the volatile economic backdrop”.
He said: "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."
The lender confirmed the status of all affected pipeline cases will shortly be updated on the Magellan Hub and urged any intermediaries with queries to get in contact.
Martin Stewart, director of London Money, said: "It is a shame to see any lender close to new business.
"We need as many lenders as possible across all sectors to make the market competitive for the consumer."
In January Fleet Mortgages withdrew its entire product range with immediate effect as it waited for its next funding line, and in February Secure Trust Bank ceased new mortgage lending until "conditions become more favourable".
But Mr Stewart said he questions whether this is becoming a trend in the market.
He said: "The sector that Magellan was in is very competitive where the onus is on market share and it seems those with deeper pockets are able to last longer when it comes to race to the bottom.
"There may be funding issues as well and, with the Brexit background currently as it is, the UK may now be perceived as too volatile to invest in."
rachel.addison@ft.com
