Northern Rock turns full circle
After months and months of winding down the mortgage operation, with large incentives offered to customers to move to other mortgage companies, the UK government has announced plans to grow the mortgage business in the future. It is expected that mortgage funding from the Northern Rock will increase to around £14 billion in years to come although it is highly unlikely the same investment strategy will be used!
The company will almost certainly be more dependent on customer deposits and to a lesser degree on the wholesale money markets which were originally the downfall of the group. It looks as though the company will have its work cut out trying to rekindle and recapture its former reputation in the mortgage market after effectively closing down the operation since been taken under government control. This is a marked turnaround by the UK government for a company which still owes the taxpayer in excess of £20 billion.
The Northern Rock has also been at the centre of claims of heavy handedness with the percentage of customers subjected to repossessions significantly higher than the industry average. It will be interesting to see what shape the new look Northern Rock will take and what investment strategies and customer services will be on offer.
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