Northern Rock announces losses of £1.36 billion
Northern Rock today announced losses of £1.36 billion although £1.2 billion of the losses incurred as a result of interest charges and fees paid to the UK government. While there's been no official confirmation as to the remaining balance of taxpayer funding owed by the bank it is known to be significant and into the billions of pounds. So what does the future hold for Northern Rock?
The company has been something of a nightmare over the last 12 months having been taken under government control after nearly bringing the UK financial sector to its knees. After instigating a programme which saw the vast majority of mortgage holders transferred to competitors the company has now done an about turn and will be injecting up to £14 billion into the UK mortgage market over the next two years.
While the headline figures, after taking into account interest and charges, are not too bad it is worth remembering that Northern Rock has the worst repossession rate in the industry and at the moment some of the most uncompetitive mortgage rates around. It will be interesting to see how quickly the UK government is able to inject the planned £14 billion into the mortgage market and at what rate the funds will be made available.
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