UK government relax payment terms for Northern Rock
It has today been announced that the UK government has relaxed the payment terms afforded to the Northern Rock regarding a £26 billion loan from the UK taxpayer. This significant U-turn will allow Northern Rock to slow the rapid decline in its mortgage book and offer competitive mortgage services to UK property buyers. It is hoped that the move will instil more confidence and competition into the sector and lead to others following suit.
The U-turn by the government has surprised many in the industry as Northern Rock were seen as something of a busted flush and a business which was in severe wind down mode. The business has attracted a lot of criticism with many suggesting that it will not be able to repay the £26 billion loan in full. The relaxation of the payment terms is something of a double edge sword as it should assist in stabilising the UK property market although taxpayers will have to wait substantially longer for repayment of the loan.
As the UK government has a significant interest in Northern Rock, Bradford & Bingley, Royal Bank of Scotland, Lloyds TSB and HBOS there are hopes of a significant shift in interest rates and mortgage liquidity in the short term. Whether this actually happens remains to be seen but the sector and the UK economy in general is crying out for assistance.
Share this..
Related stories
EU ministers set to increase climate risk budget
The European Commission has announced that poor countries around the world should be funded to the tune of $2 million-$15 billion a year to help them combat climate risk. This comes at a time when the European markets and European economies are struggling and many EU members are seeing their national budgets in deficit and national debts continuing to rise. While the figure of up to $15 billion a...
Read MoreGovernment incentivises councils to build new homes
The UK government has followed through with plans to incentivise councils to build new houses in the short to medium term with an array of bonuses and lucrative payments on offer. However, as ever, the devil is in the detail and today we find that in order to fund these significant payments for those who build houses and reach their targets the government will slash grants to local authorities who...
Read MoreAlex Salmond plays a dangerous game with Diageo
Fresh from defeat in saving the Diageo Kilmarnock plant, Alex Salmond, leader of the Scottish executive, has today attacked Diageo claiming that the company "cannot just walk away" from the problems the planned closure will cause in the area. However, this is a very high-risk strategy when you consider that Diageo still employs over 4000 people in Scotland and still remains one of the largest empl...
Read MoreRBS and Standard Chartered weakest UK lenders
01/12/2015 The Royal Bank of Scotland (RBS) and Standard Chartered have been shown as the weakest out of the UK’s seven largest lenders in a Bank of England (BoE) stress test. The BoE subjected the UK’s largest lenders to certain tests to monitor if they would survive a financial shock. This time the scenario was if oil had fallen to $38 a barrel and that the global economy had slumped....
Read MoreHas the Tory budget plan gone far enough?
Despite the fact that George Osborne is contemplating public sector cuts the likes of which have not been seen for over 30 years, there are still many people who believe he needs to go further. The official opposition party has also suggested a "budget watchdog" which would monitor the state of the UK budget and how much the UK government is borrowing. But does this watchdog have teeth?