Northern Rock

Dr_Hook

I think Northern Rock filled an important niche in the UK mortgage industry - how many FTBs have/had a mortgage with NR? I know I have, and many of my FTB friends & colleagues have too.

With house prices as they are, high LTV mortgages are a necessary evil if you want to get on the property ladder. Without NR, I wonder how property prices will be affected. Perhaps this will be the beginning of a decline in the market.

Incidentally, according to BBC NR customers withdrew £1bn yesterday. This has got to compound their problems.

pania

yep and i've arranged mortgages for numerous customers who have taken advantage of the 125% facility, it's horses for courses. I have to say over this last week i have arranged more tracker rate mortgages for people than i think i have ever done. even first time buyers right now are shying away from fixed rates. Some lenders are now offering trackers AND fixed rates as low as 5.49% somthing almost unheard of a month ago, Maybe this shows a lack of confidence in the market and a belief that interest rates will fall?
customers ask my opinion on it and to be honest who's got a crystal ball! i've no idea any more than anyone!!:-) (would be nice if they dropped a bit though wouldn't it.)

Dr_Hook

I guess no-one really knows. I remember reading an article a couple of weeks ago saying that property/economics 'experts' have been predicted an 80s style crash to happen as early as 2000 which just hasn't happened - quite the opposite.

The market does seem to be slowing down though. I think the willingness of lenders to offer high LTV and salary multiples has allowed property prices to go higher than they would have done otherwise. Surely prices will drop if lenders are now reluctant to continue doing this.

pania

I have to admit that a few months ago you could get crazy income multiples from lenders that based the mortgage amount on "affordability", just now it is hard to get anything above 4.5 times income pretty much. I guess it's a case of watch ow it pans out over the couple of weeks and take what comes, The "second hand" market has slowed down but the new build sector is as strong as ever. Could be due to the deposits and incentives most builders offer making it easier for 1st time buyers. who knows? right off on an appintment else i'll be late. have a good day.

freecelt

Just seen the BBC news, there is a deffinate run on Northern Rock, everyone is clearing their accounts out. Could the bank go bust because of this?

My wife has an unsecured, fixed rate loan with them, if they go to the wall, how will the loan be affected? Can they demand the full amount be paid back immediately? Or could it be affected in some other way?

thanks in advance, Mark

Dr_Hook

See the link in my post #41 above

BoE have extended an unlimited line of credit to NR so it's unlikely that they'll go bust, it just means that they're gonna have to hike interest rates and be more careful about who they lend to.

Even if they did go belly up, your wife would just continue paying as normal, be it to a receiver or to another company who have bought NR's portfolio.

bobble293

In the early 80's, we had a mortgage with Halifax. (quite small, quite affordable) I was made redundant, so followed the advice given. Discuss it with your lender, keep them informed, etc.

Sat opposite the branch manager, told my story, asked what could be done, naively expecting sympathy.

Briefly, was offered three months interest only payments, (not much less than I was paying) this would be reassessed after three months, then another three months interest only considered. At the end of this second period of interest only payments, I was told, I should then consider whether or not I could afford to stay in my house.

I left the Halifax branch, got a job I wouldn't otherwise have taken, and continued to make the repayments, no reduction, no break, and after three months was invited to see the manager to discuss the situation. He wasn't aware that no variation of the payments had occurred. We kept paying, increasing our payments as interest rates rose to 15% or more, and didn't reduce the payments when interest rates dropped.
The result was that we paid the mortgage off years early, and are now debt free.
Unfortunately, Northern Rock have a chunk of our savings on deposit, and we lost a pension to Equitable Life. Just can't win!!
The problem with cash is that it has no intrinsic value it's only worth what someone will swap for it, and if you're on a desert island with a shedload of Sterling notes, they're useless, save as fuel, or mattress stuffing.

izzybusy23

Dr_Hook wrote: »

It's a sign of the times - sadly public perception is more important than reality.

Makes me wonder why no-one so much as blinked when Barclays borrowed £1.6bn 2 weeks ago though

If you remember the headline was 'a major british bank' and there was speculation that it was northern rock then.. I think it was hushed up on the day the news broke and it was the next day that it was told that it was barclays.

Also I think barclays is seen as a more reputable 'high street, tighter lending' bank than northern rock.

postingalwaysposting

i am quite lucky as i have no dealings with NR but i feel for those who have however i dont belive NR will 'crash and burn' i belive the BoE will help out and all it will mean is that NR will increase intrests and start looking over who/how it lends. I dont understand why people are taking all there savings out? They are protected by the government and are in no way at risk.

bankersmug

It is claimed that One thousand million pounds (okay I meant a billion - had some strange notion that a billion meant a million millions before I checked this out, doh!) has been withdrawn by customers of Northern Rock. According to the news, one of the reasons Northern Rock has had this difficulty is that they have plenty of loans customers but not enough savings customers.

I just find the idea that there was £1billion of cash on the streets of Britain yesterday rather surreal. Could this figure possibly be an exaggeration?!