Should Northern Rock Reduce their SVR further?

carlw

Hi
I just wondered what peoples opinions were on whether the Nationalised bank Northern Rock that was bailed out by the government and has today reported a loss of £725m should be doing more to help its borrowers.

This may seem like an obvious question, that will be divided by whether you have a northern rock mortgage or not. Those that don’t will most likely think the lender should not do anything to help borrowers and concentrate solely on getting the tax payers money back. I hope we can have some more in depth opinions here though, as with the number of Northern Rock borrowers defaulting considerably above the average, maybe a lower SVR could result in less defaults and the government being paid back quicker. With a lower rate borrowers can over pay and reduce their LTV and then move to another borrower. Also consider Northern Rocks SVR in comparison to all the other banks, consider the current base rate and how most lenders passed on each reduction while Northern Rock didn’t.

In my opinion, Northern Rock should certainly not do anymore than other banks out their to help borrowers, but it should lead by example as a nationalised bank. By reducing the Base rate the Bank of England was attempting to encourage lenders to reduce their rates. If Northern Rock didn’t pass these cuts on then how can the government encourage other lenders to? At 4.79% it is considerably higher than some other SVRs out there.

ILW

NR have just posted an enormous loss. I guess they need to get the money from somewhere and their debtors are the most obvious place.

beecher

I think the mortgage book with NR has is so toxic that cutting the SVR further would be a drop in the ocean. Many of the people in arrears are in huge debt, and negative equity - they're not going to be moving to another lender. Overpaying their mortgage by £100 extra or so is not going to make a blind bit of difference to many. This problem will escalate in years to come when the SVR increases and repossessions climb.

geoffky

What are people going to do when the rates go up a lot more in the next few years? if people are struggling now,god knows what its going to be like when rates rise. .

carlw

If Northern Rock have not reduced rates everytime the BoE has reduced the base rate what will happen when the BoE start increasing the base rate. I bet they dont miss an increase!!

ILW

BoE base rates mean noting any more.
Banks are having to pay 4% to attract savings, so are not going to lend at less than that.

carlw

ILW wrote: »

BoE base rates mean noting any more.
Banks are having to pay 4% to attract savings, so are not going to lend at less than that.

There are plenty of mortgages out there below 4% if you have a LTV of 75% of better, and there are even more SVRs below 4%, NR are just not one of them. Other banks are managing it why cant Northern Rock. The problem is those that were/are not struggling and have a reasonable LTV have their rates reduced more than those that are struggling so they are even better off and those that are struggling don’t have their rates reduced so continue to struggle. Its all sold as though the banks are helping people by reducing rates but in fact the only people they are helping are those that most likely didn’t need it. They may as well have not reduced rates at all and what real difference would it have made. Obviously NR don’t want to reduce their SVR so nobody leaves but they could reduce it inline with other lenders that my point.

I am a together mortgage holder and have a rate of 6.19% until 01/12/2009 at which time ill move onto the SVR of 4.79% which is a reduction so i guess i shouldn’t complain. I make overpayments each month and am not struggling in the slightest. I bought my house in December 2006 and borrowed over 100% so probably owe what my house is worth so there is no hope of moving the mortgage. My issue is that if I were with a different lender my SVR would be less, I would then be able to overpay more and move myself into a situation where I had some equity and could remortgage.