We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
PLEASE READ BEFORE POSTING: Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
northern rock on the news begging for cash
Comments
-
MarkyMarkD wrote: »NR's bad debts are far better than many other prime lenders. To call them sub-prime is mis-understanding the expression.
Oh dear Mark - go to their webpage whilst it's still there:
http://www.northernrock.co.uk/intermediaries/intermediaries_index.asp
Do you see that huge 'OPEN FOR SUB-PRIME BUSINESS' banner zooming away at the top of the page....
(by the way: that thing in your mouth is your foot :rotfl:)--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
Debt_Free_Chick wrote: »It's market sentiment ..... there is a fear - not yet based on any real experience - that lenders will start to default.
NR is not and can not be insolvent. If it were, then the BoE is under a statutory obligation to close it down.
If the BoE wouldn't be giving NR huge amounts of cash (because no one else will), it would have to wind up it's business pretty sharpish.
Maybe I'm picky, but that kind of says 'insolvent' to me.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
I don't agree with your views, !!!!!!?Mark, to repeat my point: There's a reason why NR are the first to be going cap in hand to the BoE.
They can't raise capital on the financial market because no-one trusts them enough to lend them money at reasonable rates.
The reason no-one trusts them to repay a loan is because they have been one of the more 'reckless' lenders. They rely on borrowing money against 'securitized' loans which the market has decided aren't worth what they say they are.
The BoE will give them money not because they think they are a good bet, it's because they desperately want to avoid a systemic crisis in the banking system.
NR supposedly account for 1 in 5 mortgages in the UK and if they defaulted on loan obligations it would be a catastrophe for banking.
Hence the BoE will give them enough cash to stay liquid in the short term and we can expect a takeover by another bank just as soon as The Powers That Be can organise it.
The issue regarding securitisations is nothing to do with an assessment of NR's asset quality. There is just no interest in investing in ANYONE's securitisations right now.
And that leaves NR vulnerable because their whole lending strategy is based on securitising mortgages on a regular basis. THAT is why they are first "cap in hand" to the BoE - NOT because they make bad loans, but because they are SO reliant on securitisation and securitisation is a bad source of funds to need right now.0 -
BobProperty wrote: »Questions are: Will people be queuing to get their money out at 09:00 tomorrow? (happened to Countrywide in America)
and
Is it worth a put or bet in that direction?
Now that is a very interesting question ..... and just a little disturbing :eek:Warning ..... I'm a peri-menopausal axe-wielding maniac
0 -
If the BoE wouldn't be giving NR huge amounts of cash (because no one else will), it would have to wind up it's business pretty sharpish.
Maybe I'm picky, but that kind of says 'insolvent' to me.
OK - I understand your point And it may well be a little subjective.
As I understand it ... the BoE believes that NR's "problem" is temporary and only to do with the current market sentiment. That, fundamentally, it is a sound business and worthy of support. That, if it were a crock of $h!T, then it wouldn't have "helped".
That's how I see it ... anyone else? Warning ..... I'm a peri-menopausal axe-wielding maniac0 -
If you had read everything about NR as I have, you'd realise that the foot in my mouth is yours. :rolleyes:Oh dear Mark - go to their webpage whilst it's still there:
http://www.northernrock.co.uk/intermediaries/intermediaries_index.asp
Do you see that huge 'OPEN FOR SUB-PRIME BUSINESS' banner zooming away at the top of the page....
(by the way: that thing in your mouth is your foot :rotfl:)
NR do NOT do sub-prime lending on their own behalf. In common with other lenders (e.g. A&L) they originate sub-prime lending on behalf of Lehman Brothers.
There is no risk to NR or A&L in respect of these loans.
NR has dramatically increased the rates on these sub-prime products recently (as was well publicised) because of the sub-prime market issues - basically, because Lehmans cannot securitise these assets.
That still doesn't leave NR with a problem (in respect of sub-prime). They just won't do as much of this Lehmans backed lending and will lose a few £ of profit. Not a big deal.0 -
BobProperty wrote: »Questions are: Will people be queuing to get their money out at 09:00 tomorrow? (happened to Countrywide in America)
and
Is it worth a put or bet in that direction?
They won't have to be - thanks to the wonders of internet banking, the run could be going on right now!
(I've just checked - they haven't taken the website down yet. Took a HUUUUUGELY long time to load up the 'sign into internet banking' page though; seriously long time, I went to make a cup of tea and it still wasn't there, it was around 5 mins in the end. Do you think their server's a bit busy at the mo :-)0 -
If I had any money in NRK, I'd queue up* to take it out - not because I think they'll go bust, just for sh1ts & giggles.
*I'd make sure I was there at 8:50 or earlier so I'm properly queueing."Mrs. Pench, you've won the car contest, would you like a triumph spitfire or 3000 in cash?" He smiled.
Mrs. Pench took the money. "What will you do with it all? Not that it's any of my business," he giggled.
"I think I'll become an alcoholic," said Betty.0 -
MarkyMarkD wrote: »If you had read everything about NR as I have, you'd realise that the foot in my mouth is yours. :rolleyes:
NR do NOT do sub-prime lending on their own behalf. In common with other lenders (e.g. A&L) they originate sub-prime lending on behalf of Lehman Brothers.
There is no risk to NR or A&L in respect of these loans.
NR has dramatically increased the rates on these sub-prime products recently (as was well publicised) because of the sub-prime market issues - basically, because Lehmans cannot securitise these assets.
That still doesn't leave NR with a problem (in respect of sub-prime). They just won't do as much of this Lehmans backed lending and will lose a few £ of profit. Not a big deal.
OK - so they're nothing to do with sub-prime (despite the huge banner on their website http://www.northernrock.co.uk/intermediaries/intermediaries_index.asp which proclaims OPEN FOR SUBPRIME BUSINESS)
and
they don't have any problems with sub-prime lending ... except that they're probably the biggest UK exponent of self cert and 100% or greater LTV mortgages (a major reason why the markets aren't willing to loan them money).
and
there's no danger involved in investing money with them - except that if the Bank of England weren't giving them emergency funding tonight they'd be going out of business pretty quickly because no-one else will give them cash.
Cool - I guess you'll be moving your savings to them then, since they offer some of the best interest rates available to UK savers. Somehow I can't see Martin recommending them on the 'best savings accounts' pages though, :rolleyes:--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
(I've just checked - they haven't taken the website down yet. Took a HUUUUUGELY long time to load up the 'sign into internet banking' page though; seriously long time, I went to make a cup of tea and it still wasn't there, it was around 5 mins in the end. Do you think their server's a bit busy at the mo :-)
Of course, it could just be people checking their balances.
On the other hand, when banking was about cash, if there was a run on a bank they'd pay out to depositors in quarters or shillings and count slowly just to let things calm a little. Maybe this is the C21 version.0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.2K Banking & Borrowing
- 253.6K Reduce Debt & Boost Income
- 454.3K Spending & Discounts
- 245.2K Work, Benefits & Business
- 600.9K Mortgages, Homes & Bills
- 177.5K Life & Family
- 259.1K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards