Northern Rocks double edged sword
Northern Rock, the nationalised UK bank, has today confirmed that lending liquidity of up to £14 billion will be pumped into the UK mortgage market over the next two years. It is forecast that £5 billion of this figure will be made available in 2009 with the balance in 2010. However, this is something of a double edge sword as the company has also admitted debt repayment problems have soared for Northern Rock customers.
It is common knowledge that Northern Rock as one of the highest repossession rates in the UK mortgage industry even though the UK government has promised time and time again that mortgage holders would be given time to get their "house in order". While there is no doubt that mortgage rates available from Northern Rock have become more competitive over the last few weeks there is significant concern about the ever-increasing number of negative equity customers.
This was a significant U-turn from the earlier UK government policy which indicated a general running down of the Northern Rock mortgage operation, indeed we saw many customers "rewarded" for moving to other mortgage providers. The future for Northern Rock is still very uncertain as one day we see the government pumping extra money into the mortgage market and on other days we see a focus on the repayment of the taxpayer funds used to bailout the business.
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