Northern Rock to be Nationalised

dekh

stuart30 wrote: »

Hmmm being reading through this thread with great interest...Ive currently got a 100% mortgage with NR and its up for renewal 1st of July,whats the general opinion regards NR are they still a safe bet or should i be looking to get out while i can.

I"ll be looking else where to compare rates of course on the 1st of May which i believe is the earliest time thats allowed.

I would guess that your home is safe. The deeds will be registered in your name. NR will have a charge registered to show you owe them money, that's all. It doesn't matter who owns NR's mortgage book. In fact despite all the noise, NR's mortgage book is still looking very healthy and would be the most profitable part to spin off. Their problem is that they have no major funds to offer new mortgages, they can only do this when someone redeems one of their NR mortgages. Post Nationalisation I would suspect that all redemptions will go to paying back the debt.

amcluesent

Seriously, I would now consider getting a mortgage from the Crock and suspending payments. It would be political poison for the press to get hold of stories of families being reposed and evicted by 'Gordon's Bank'. I think they will have very, very flexible rules on defaulters.;)

Optimist

The new chairman has said that he likes the plan put forward by the NR management team who wanted to buy the company ie redeem half the mortgage book. The way to do this is to increase the rates paid by people who have mortgages with the Rock so they leave and move to other providers

bigturnip

Optimist wrote: »

The new chairman has said that he likes the plan put forward by the NR management team who wanted to buy the company ie redeem half the mortgage book. The way to do this is to increase the rates paid by people who have mortgages with the Rock so they leave and move to other providers

Or default and put them in even more trouble, remember a large proportion of NR customers have greater than 100% mortgages and who exactly is going to take on that debt, especially in a falling housing market? They can't pay higher rates, they can't transfer, they've had it. Let's try and ruin all the NR customers now we've screwed the employees and tax payers, I can see that one going down well.

sm9ai

merlinthehappypig wrote: »

Northern Rock is the only bank with a 100% guarantee of all funds. The £35000 limit doesn't apply - it's unlimited.

It's the safest possible place for savings at present, with an undertaking by the Government of at least 3 months notice of the 100% guarantee being removed.

All the above issues apply to any bank covered by the FSA's guarantee and some are looking equally as wobbly as NR. Advising someone against NR because of the nationalisation is unhelpful and innacurate IMO. I wouldn't have over £35000 anywhere else except NS&I.

Yes it is 100% guarenteed but this guarentee has never been tested and this is a huge point. If things go wrong, which is certainly possible,(do you trust this (any) government?, have they ever lied before?) then your money is not going to be easy to access.

For that reason I will never put money into NR.

Guy_Montag

Paul_N wrote: »

Lots of Labour voters up north.

Most Labour voters up north will vote Labour anyway - it's marginals that they chase. Though talking to a Co. Durham taxi driver a couple of days ago - lifelong Labour party member until last election - will vote for posh-boy Dave.

SquatNow

Interesting Idea... the new Northern Wreck could allow mortgage holders in Negative Equity to swap to another provider and turn the NE into a secured loan.

So you have a £100k mortgage and you house is now only worth £95k.
NR take 90k, turn the missing 10k into a "homeowner loan" and you get a 90k loan at 95% LTV (5% deposit) from another provider.

Now instead of £100k exposure, the NR is only exposed to £10k. In any repossession at auction the place will lose 20% (20k) anyway.

epz_2

SquatNow wrote: »

Interesting Idea... the new Northern Wreck could allow mortgage holders in Negative Equity to swap to another provider and turn the NE into a secured loan.

So you have a £100k mortgage and you house is now only worth £95k.
NR take 90k, turn the missing 10k into a "homeowner loan" and you get a 90k loan at 95% LTV (5% deposit) from another provider.

Now instead of £100k exposure, the NR is only exposed to £10k. In any repossession at auction the place will lose 20% (20k) anyway.

why would someone do this though, the loans would be at a higher rate and any lender is going to run a mile from somone with upteen grand in debt secured on the house and a high ltv.

Generali

SquatNow wrote: »

Interesting Idea... the new Northern Wreck could allow mortgage holders in Negative Equity to swap to another provider and turn the NE into a secured loan.

So you have a £100k mortgage and you house is now only worth £95k.
NR take 90k, turn the missing 10k into a "homeowner loan" and you get a 90k loan at 95% LTV (5% deposit) from another provider.

Now instead of £100k exposure, the NR is only exposed to £10k. In any repossession at auction the place will lose 20% (20k) anyway.

It's an interesting idea but one of the things that any buyer of the loan book will be interested in is what's called VAR (Value at Risk). That's a measure of the maximum loss you can expect to suffer under various circumstances. Clearly a default on an unsecured loan is more likely (less to lose) and more costly (no collateral) than on a secured one.