Rival banks protested that the nationalised company could enjoy a huge competitive advantage over them and steal business away. And MPs complained that the Rock was risking repossessions by attracting new customers with offers to lend them far more money than their homes are worth, by offering cheaper rates on loans of up to 125% of property values - where a quarter of the debt is unsecured. The political crisis deepened after the Government refused to deny claims that taxpayers face a £100m bill for the cost of advice from banks and lawyers during the failed efforts to secure a private sale. The Prime Minister has said nationalisation was a temporary measure, although new Northern Rock boss Ron Sandler has said it will be ’some years’ before the bank can repay its debts. Today’s emergency Bill will give the Government special powers for 12 months to nationalise any bank, not just Northern Rock where it is necessary to protect “the stability of the UK financial system”.
Posts Tagged ‘Northen Rock mortgages’
Banks protest at Rock’s unfair advantage
Tuesday, February 19th, 2008What now for Northern Rock mortgages?
Monday, February 18th, 2008Homeowners with a Northern Rock mortgage will continue to pay it as normal. Monthly payments and terms and conditions will remain the same, but Northern Rock mortgage holders now owe the taxpayer money rather than the bank. They will find, however, that securing a new deal from Northern Rock is unlikely to be worthwhile, as the bank’s mortgages have become uncompetitive since the crisis began and better rates can be found elsewhere. The number of new mortgages from Northern Rock will be seriously reduced and rates are likely to remain uncompetitive. The Government will seek to avoid being accused of using the benefits of state ownership to beat rival mortgage lenders’ offers. Currently, Northern Rock’s two-year fixed rate mortgage is set at 6.99%, with a £1,995 fee – this compares to Halifax, which is offering a two-year fixed rate at 5.89% with a £999 fee.
