Northern Rock Mortgage Revival
I always find it interesting to see which mortgage lenders homeowners are choosing to opt for. It helps to develop an inpression of what buyers consider to be great mortgage deals and what they don’t. Saying this I was still surprised to read the BBC News report on Northern Rock.
During February and March their mortgage applications rose by 70%, which is fairly impressive by any banks standards, but is still shocking considering the government is urging them to remove their mortgage deals of 125% LTV’s.
According to the National Audit Office over 33% of their mortgages had fallen into negative equity, with a further 10% expected to join them by the end of this year. Look at this and they don’t come across as offering much security to borrowers.
There is almost 2 sides to their story.
On the one hand, their plans to lend an extra £14bn in the next 2 years, certainly projects a kind of confidence which suggests they are the place to go to get a mortgage. But on the other hand the proportion of borrowers who have gone into arrears whilst investing with them isn’t promising, rising from 2.92% in December to 3.67% of March. This figure alone leaves the impression that they are lending irresponsibly.
Then there is the fact that they have reported a loss of £1.4bn in 2008 due to them setting aside money to cover bad debts with customers.
Okay, okay… maybe I am looking at these figures negatively, but there is definitely plenty to consider when you examine their history.
It is just a question of determining whether their competitive mortgage deals are worth the risk. Already they are predicting negative losses for 2009 and have got the government asking them to reduce their lending – it is a very 2-sided story.
Wendy xx
