Northern Rock cut a scandalous 0.15% from Nov 1st

russelleng

Maybe the mortgage book is financed by means other than BoE borrowing, particularly fixed interest borrowing (like 1-year bonds), so changes to BoE base rate could be as irrelevant as they are for most banks.

It does tend to make the drop look rather pointless and ineffective though for consumers.

wisbech_lad

NR want to run down their mortgage book to be in line with their deposit base, rather than borrowing from the government/ money markets.

RichyRich

As a nationalised bank, competition laws do not allow NR to be too competitive, otherwise the government would be seen to be abusing its ownership.

coupleuk

Surely, when GB and AD stated they "expected banks to pass on the rate cut", they should have led by example and do just that with the bank they decided to purchase.

Paul

koexelek

This is a real kick in the teeth for those on Togethers on the SVR with negative equity.
People with lower loan to values can remortgage elsewhere ( which is what NR want), but these borrowers have nowhere to go.

Tom_Kelly

Northern Rock need to bring in as much gross income as they can in order to cover their own expenses and reduce their borrowing. They have a captive customer base who can’t move if they wanted to so they can afford (in their eyes) to charge them as much as they can get away with. Their ‘justification’ is that customers with a together mortgage borrowed much more than they would have been able to elsewhere and therefore are probably living in a larger property than they would have been living in if they hadn’t been lent the money by NR.

It worked well for me 8 years ago but I have since moved to a base rate tracker.

vigesimal

minimike2 wrote: »

If you want to lay blame then blame the American banks who started this all off.

??? Many of the toxic mortgages NR have are British ones.

Greed is to blame. People wanted to sell these 100% and 125% mortgages and get their cut.

koexelek

Tom_Kelly wrote: »

Northern Rock need to bring in as much gross income as they can in order to cover their own expenses and reduce their borrowing. They have a captive customer base who can’t move if they wanted to so they can afford (in their eyes) to charge them as much as they can get away with. Their ‘justification’ is that customers with a together mortgage borrowed much more than they would have been able to elsewhere and therefore are probably living in a larger property than they would have been living in if they hadn’t been lent the money by NR.

All of that is true, but do they really want to repossess many of these people ?
Surely it will cost more to do that, than try to help them by lowering the rate a bit ?

Tom_Kelly

They will only repossess if customers don’t make any payments. If a customer pays less than the true charge rate then they will add the unpaid interest to the loan.. Not good as you would be paying interest on the unpaid interest but you won’t lose your home. If it is a repayment mortgage then the term can be extended to suit the lower payment. Speaking to the lender is vital though

My son handles around 20 cases each week for lenders taking customers to court. Only non payers go to court and his instruction from lenders at present is to accept any deal offered.

koexelek

Tom_Kelly wrote: »

They will only repossess if customers don’t make any payments.

I know, but a lot of Together borrowers won't be able to make the payments when they go onto the standard variable rate, and many of them will be on interest only on the secured part of the loan already.

Yes, these borrowers were highly speculative, and are now paying the price,but NR made the decision to offer these types of mortgages in the first place, but now wish to wash their hands of them.