A rock does bounce after all...maybe...
Posted on 23 February 2009 by
Northern Rock is set to return to the mortgage market with a £14bn lending plan only 12 months after it was nationalised. The nationalised bank will also offer deals up to 90 per cent loan to value, a level that has been severely lacking in the UK market of late.
In 2009, the bank will lend £5bn in 2009, and lend the other £9bn by 2011. The Government is allowing this move as the bank has paid back around £18bn of its £27bn Government loan, much quicker than anticipated. A percentage of this pledge is Government money.
Chancellor Alistair Darling told the BBC Today Programme that while the rate of Northern Rock’s payback will slow down, it is better that it remains a lending bank.
Darling said: “We are working to resolve the problems in the banking sector and get to lending again. People need to put this into perspective - this is one of a number of measures. We are using Northern Rock to help fill the gap left by the international banks.”
Darling called 100 per cent mortgages “ridiculous” and said he is going to make sure Northern Rock mortgages will not exceed 90 per cent, judged on a case-by-case basis.
Whilst the news, at face value, appears to be good, the devil is always in the detail. What will the criteria be? What sort of service levels will NR offer? Etc etc. There is much still to be found out, but let’s not get too negative now…It’s a start…
Categories: Mortgages, Interest rates, Mortgage Lenders, Government
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