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Northern Rock cuts 0.5% from standard variable rate mortgages

The Northern Rock is tonight under serious pressure after the revelation of a 0.5% cut in the standard variable rate mortgage package offered by the company. Northern Rock is under government control, having been saved via taxpayers funding, but recent results show the group is the most aggressive in the market place when it comes to repossessions and passing on cost savings. The 0.5% cut in the global rate is below the 1% base rate cut and is attracting serious criticism from those in the marketplace.

The government has been pressing the other major UK banks to pass on cost savings at a time when an operation effectively under government control is not singing from the same hymn book. This does not strengthen the position of the UK government as they continue to pursue the likes of Barclays and HSBC into passing on significant cost savings to the consumer. Cries of hypocrisy are growing and there is very little argument from the government which has seen its position weakened substantially.

There are also grave concerns that the Northern Rock will not be in a position to repay the taxpayer funded rescue in full because after discarding the better quality mortgage customers the group is left with a somewhat lower quality mix of mortgages.

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