Northern Rock End of Mortgaged Deal (Merged Threads)

Mary_Hartnell

To sum up, the money had gone bad in the hands of the banks.
The government has pledged a large percentage of the tax take to these bad banks and managed to force the real (LIBOR) interest rates down below 2.5%.
At these low interest rates, those borrowers in negative equity may be able to carry on paying.
Those who have already gone bankrupt and put their families on "the social" will be joined by a wave of elderly folk, who cannot afford to exist on zero interest on their savings.
We may or we may not be heading for more currency devaluation and resulting inflation, it all depends on a mixture of foreign sentiment and how the government behaves after the next election.
Sad for the bankrupt and the elderly, but I could turn out as the least worse result of the crazy bubble economy.

MarkyMarkD

stephensdan

The point you are missing in your analysis is that the average OTHER mortgage lender was lending at an average of around 50-70% LTV (quite low, because although FTBs were often taking 90%, remortgagers were often taking 30-50%).

For NR, huge proportions of the FTBs were taking 100-125%. Huge proportions of the remortgagers were not blue chip remortgagers, they were over-indebted individuals consolidating their unsecured debt and taking ... guess what ... 100-125% LTV.

Couple that with the bit of sensible lending NR were doing, and you get an average new loan LTV far, far higher than other lenders.

Then look at other factors.

NR's business model was to churn customers and to add fees onto the loan. So every two years, people added another few thousand onto their borrowing to keep their payments down. Whereas with other lenders, LTVs fell over time, with NR they did not as much because people were always eating up their equity.

Regarding your comments on SVR, they are simply wrong. NR's SVR is too low for the level of risk in their portfolio. It should not have fallen as BBR has fallen, because the level of risk has continuously increased. Other lenders' levels of risk have not increased as much, because their LTVs were significantly better in the first place, and they can far better justify reducing rates roughly in line with BBR (but still not as much as lenders like Nationwide have done, but that's another story).


Your suggestion of buying NR after all this being like buying a nicely done up house is rather laughable. I think the more appropriate simile is buying a "cut and shut" car which has had a nice respray on it. It may look OK from the outside but it will fall apart as soon as anything - like another downturn in the economy or the housing market - hits it.

garymcc1967

I too have a similar problem with Bradford & Bingley, they do not wish to continue with their mortgage book so are looking for customers to seek alternatives. Unfortunately due to the total mis-management of most of the financial institutions and their greed most are now reluctant to lend. I am now faced with staying with B&B and accepting their rather large variable rate or looking for alternatives. Again, due to the banks house prices have dropped and our 85% mortgage is now looking to be 100% as the LTV has increased. I think i will move my money and keep it under my mattress!!

scotty1971

i've currently got my mortgage my mortgage with NR,hopefully be remortgaging with Brittania,going through the process just now.i owe 26000,house valued around 115000,phoned NR today,just on the off chance,to see if they will be offering any new deals to existing customers soon,was told not at the moment,and she had no idea of the timescale when it would start.when i said some customers had been told it would be soon,she told me they had been given false information,so who do we believe?

Mary_Hartnell

If you need more than 80% Loan To Value life will be difficult:

http://www.citywire.co.uk/Adviser/-/news/market-and-shares/content.aspx?ID=332505

Nonshy

MarkyMarkD.... can you prove your over exaggerated statements regarding NR's mortgage book?

You really should become a journalist....

Nonshy

MarkyMarkD wrote: »

stephensdan

The point you are missing in your analysis is that the average OTHER mortgage lender was lending at an average of around 50-70% LTV (quite low, because although FTBs were often taking 90%, remortgagers were often taking 30-50%).

For NR, 1: huge proportions of the FTBs were taking 100-125%. Huge proportions of the remortgagers were not blue chip remortgagers, they were over-indebted individuals consolidating their unsecured debt and taking ... guess what ... 100-125% LTV.

2: Couple that with the bit of sensible lending NR were doing, and you get an average new loan LTV far, far higher than other lenders.

Then look at other factors.

NR's business model was to 3: churn customers and to add fees onto the loan. So every two years, people added another few thousand onto their borrowing to keep their payments down. Whereas with other lenders, LTVs fell over time, with NR they did not as much because people were always eating up their equity.

Regarding your comments on SVR, they are simply wrong. 4:NR's SVR is too low for the level of risk in their portfolio. It should not have fallen as BBR has fallen, because the level of risk has continuously increased. Other lenders' levels of risk have not increased as much, because their LTVs were significantly better in the first place,and they can far better justify reducing rates roughly in line with BBR (but still not as much as lenders like Nationwide have done, but that's another story).


Your suggestion of buying NR after all this being like buying a nicely done up house is rather laughable. I think the more appropriate simile is buying a "cut and shut" car which has had a nice respray on it. 5: It may look OK from the outside but it will fall apart as soon as anything - like another downturn in the economy or the housing market - hits it.[/quote]


1: HUGE proportions did not take 100%-125% mortgages

2: Again... incorrect on point 2

3: Not sure by what you mean "churn customers" but NR aim was to retain customers and not chase new customers so products were not overly expensive in fees in comparison to other lenders, many products had no fees or tie ins

4: proves you don't really know what you are talking about

5: your knowledge and information to NR's stability is non existent

Nonshy

scotty1971 wrote: »

i've currently got my mortgage my mortgage with NR,hopefully be remortgaging with Brittania,going through the process just now.i owe 26000,house valued around 115000,phoned NR today,just on the off chance,to see if they will be offering any new deals to existing customers soon,was told not at the moment,and she had no idea of the timescale when it would start.when i said some customers had been told it would be soon,she told me they had been given false information,so who do we believe?

no one knows scotty but is likely to be soon... but soon could be 1 month to 6 months... i expect to be closer to one month

MarkyMarkD

Tell me which "exaggerated claims" you mean, and I'll answer.

Northern Rock's Granite securitisation vehicle - which doesn't own all of the mortgages NR originated by a long chalk - lost over £8m in the month of December alone due to repossessions. That's the actual amount written off.

http://www.independent.co.uk/news/business/news/northern-rocks-losses-on-repossessed-homes-soar-1604907.html

And you are claiming that NR doesn't have a pile of rubbish assets?

tony863

I don't want to butt in on the argument or discussion or whatever you want to call it, but I have a question to ask and would like it if anyone can offer any advice. My situation is like many others in that:

I am with NR and have been since May 2007 when me and my wife bought our house for £167,000. We did the old together mortgage and borrowed a further £14,000 to settle old debts and pay off the other bits and pieces.

We fixed the mortgage at 5.85% for 2 years which is due to end this May and I'm aware that the SVR is about 4.79%.

Having had a look at the market in my area, my house has depreciated by approx £15,000, based on the fact that one is up for sale in my street, same spec, for £155,000.

NR have already sent us numerous letters telling us that they will not be renewing our mortgage, so I would like to know the following if possible:

1. Will we be likely to be able to re-mortgage anywhere else and get a fixed rate at better than NR's SVR?
2. How long will NR's SVR stay at that rate and is it likely to drop further or go up in the near future?
3. Is it worth me ringing an independant financial advisor?

Any other advice would be greatly appreciated.