I suspect that Freetrade do not want to launch securities lending at the moment with the market being so volatile.
If the Russia / Ukraine war ends or inflation slows significantly, markets could spike higher - impacting short sellers, and so represent a higher risk for any shares that have been borrowed.
I doubt that Freetrade would want any customers to suffer a loss (due to the reputational risk Freetrade would incur), so would need to keep capital available to cover any losses - and at the moment they would want to have as much capital available as possible for their normal business activities.