Northern Rock

fletch3163

Have just heard on the news tonight that Northern Rock has applied to the Bank of England for emergency funding. This doesn't mean it's going under or anything but it certainly does mean it doesn't have enough money to meet its lending quotas. My God! What next?

I know there's never a good time to be in debt but I think there's certainly never been a WORSE time.

Helonearth

Not being hugely up on high finance, I have to ask if this will mean anything to me as a customer of Northern Rock for my mortgage?

Mindspace

In short term it is a bit tricky to answer the question. I guess, in worst case scenario the northern rock would up the rates on mortgages. I would'nt expect many problems for existing mortgage holders immediately(i.e next 3 months) There's very little chance of the bank going bust. There would be lenghty delays in approval of new mortgages. In longer term, if the credit crunch is still on there not much northern rock could do, bit unfair on them as a bbc correspondent pointed out. My guess would be it will be taken over by one of the main stream banks....though this is a long shot.

This is all to do with how northern rock raises funds from the money markets to lend it to its customers.

Hope i made some sense here! If not pls let me know will try my best to be much more clear.

Conor_3

Hmm..maybe time to get my savings out from my NR account?

TTMCMschine

Conor wrote: »

Hmm..maybe time to get my savings out from my NR account?

NOOOoooooooooo!!!!

If everyone turned up tomorrow & tried to withdraw their money there'd be a run on the bank & we'd ALL be totally foooooookkkkeeedddd.

Its spreads like wildfire once it starts - there is no need to panic, your money is perfectly safe, but it won't be if you all go & try & take it out all at the same time.

james32_uk

Ha ha ha - you've got to laugh at these NR a**holes havent you. What goes around comes around eh?! It's just a shame that when the !!!! hits the fan for them they have a sympathetic ear to help them out rather than the way they treat their customers.

I hope they go under (and no I've never had debt with them - I've just heard the stories).

SWS_2

Well said James, I expect you may have seen the tale of my troubles with NRock on this website, constant hounding and threatening to take our home as we are on a DMP with CCCS but they no longer accept we are in financial difficulties as we own a home and therefore are petitioning for a Charging Order without default on a CCJ. I would have loved the Bank of England to have turned round to them and said the same thing as they have been saying to us. Perhaps now they may know what "financial difficulty" is really like, shame we can't all get Bank of England's help.

trying-very-trying

Conor wrote: »

Hmm..maybe time to get my savings out from my NR account?

What are they then

Buffythedebtslayer

Declan - from BBC news this morning said that although it was a problem it wasn't a threat to normal customers, it is just that cos of the mortgage problems in the US that banks won't lend other banks money until things settle down, so Northern Rock has had to ask the Bank of England - who will apparently make it really difficult and expensive for them!

Declan said nothing would change for normal customers at the moment.

Buffy

Dr_Hook

I don't think there's anything to worry about for now. The BoE loaned the money to allow NR to continue generating new business and lending mortgages. All that will happen now is that NR will revise their lending criteria, but it won't be long before other banks follow suit. As long as NR have money coming in from their existing mortgage accounts (which are substantial - they're one of the UK's biggest lenders), they will be fine. Though I do think a takeover will be highly likely if share prices drop further.

NR have been the first to be affected by the global credit market because of the highly specialised nature of their lending - they don't have the same resources as mainstream banks to fall bank on.

The BoE wouldn't have agreed to lend had they not been convinced that NR's problem was only short term.

If NR continue struggle, it will be a result of consumer panic and savers withdrawing funds in droves

Jolinar

james23_uk wrote: »

Ha ha ha - you've got to laugh at these NR a**holes havent you. What goes around comes around eh?! It's just a shame that when the !!!! hits the fan for them they have a sympathetic ear to help them out rather than the way they treat their customers.

I hope they go under (and no I've never had debt with them - I've just heard the stories).

I couldn't have put it better myself. I've had problems with these jokers i n the past, a**holes indeed.