Rock on a roll
The ailing bank and UK loan lender, Northern Rock, announced this week that it was making “solid progress” on its business plan with the Bank of England and was on track to repay the loan from the Government, which was made last year in order to bail out the Newcastle based lender.
Ron Sandler, who was appointed to the position of executive chairman at Northern Rock by the Government on 18th February this year, has been given the unenviable task of reversing the fortunes of the bank.
He said that part of the recovery plan was to shrink the current mortgage book by encouraging existing borrowers with the Rock to re-mortgage to other providers, once their deals come to an end and a panel of advisers has been appointed, covering all sectors of the mortgage and loan markets, to assist customers in obtaining the best deal for themselves.
He warned, however, that many of their borrowers would probably have problems finding a new lender which will be prepared to take them on, due to the high loan to value ratios on a large number of borrower’s mortgages. The most notable example of this is Northern Rock’s Together mortgage range, which offered loans of up to 125% loan to value. Mr Sandler said “there may be no alternative to certain borrowers, but we will work with them to find the best possible solution to their particular circumstances”.
At the same time, Northern Rock has launched a completely new range of mortgage products, aimed at the prime market, with greatly reduced loan to value ratios and large arrangement fees. They also now have a reasonably attractive range of deposit based savings accounts which seem to be bringing in good business, as the bank is now a public company, with all its products backed by Government guarantees. It seems quite ironic that only a few months ago, customers were queuing down the street outside the bank demanding to get their money out!
