Northern Rock End of Mortgaged Deal (Merged Threads)

Rachman_2

Crokeria wrote: »

Does anyone else think NR are behaving very badly? i can understand why the Together mortgage has been withdrawn to new customers, but we exisitng customers have done NOTHING WRONG and yet we now have the rug pulled under our feet.
We have done NOTHING WRONG..its a mess of their making!!
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Crokeria, sorry to break this to you, but 'people like you' are PRECISELY why NRK is in the shtuck it is. Their model was built on feeding the quasi (and real) subprime market to grow market share aggressively. 125% lending is not a traditional normal lending practice. Which is why when the crunch (I prefer liquidity crisis) came, the riskiest stopped being lent to - because the people who do this all day realised that the NRK model was exposed and they would not risk their employers billions on it. So they left it to a politically motivated BoE to make a dog's breakfast of it instead - and have they done that in style - it will (in my estimation) cost us at least £30Bn (provided the 'good' debt walks away to better deals). [but that's another rant]

The mess is partly their making and partly yours, but can I remind you, the mortgage you signed up to was potentially a 25 year commitment, not just the special offer period. They presumably have an out if you balls up your payments (repossession) or they can require you to repay all or some of the principal (in effect forcing you to move to another lender, if you can find one - I guess they won't want to do that, they will just make it uneconomic to stay with them and if you can't refinance, you are going to find it very tough to stay afloat.

Is that NRK, no, not really, it's the only way they have any hope of surviving (in the real world). The lax credit nonsense (at all levels) that got NRK so much custom (and got so many [I'll be blunt] poor quality borrowers has almost certainly gone for a business lifetime. There will be serious fallout and those who are highly leveraged at the margins will suffer most. Sorry not to be delivering good news, but it's better to know it

[I do credit, finance and acquisitions for a living, not at a retail level, but at the corporate level, from the $500M companies upwards - it's not a pretty sight in there at the moment either.... you will not be alone]

I understand why you'd be upset and angry, but you took legal advice when you took on the mortgage, you could and should have asked what it meant if you did not understand - you wanted to be treated as adult enough to make your own decisions, it's not particularly reasonable to now argue, just because it's not going as well, that it must be someone else's fault. There are risks to signing up to things - you ought to have known that - if you don't, then the harsh view is that it vindicates the banks' effective decision to withdraw credit (or make it prohibitively expensive) to large numbers of people .

Crokeria

I would understand that Rachman if we had defaulted, but for those of us happily meeting our repayments I fail to see why this has caused Northern Wreck a problem.

I took out 110% because I knew in the LONG TERM property prices rise and in a few years I would no longer be in negative equity. NR have panicked and will cause misery to those who find their payments shooting up overnight...like I said many cannot remortgage as there are no longer these types of mortgage available.

I have resigned myself to paying the SVR and would recommend anyone to do this and maybe switch to interest only, that'll bring the monthly cost down. Sit tight and in a few years most of us should be out of negative equity. I still think I shall complain to the FSA...NR need to be more creative than simply abandoning its customers who took out a product in good faith.

Rachman_2

Crokeria wrote: »

I would understand that Rachman if we had defaulted, but for those of us happily meeting our repayments I fail to see why this has caused Northern Wreck a problem.

I took out 110% because I knew in the LONG TERM property prices rise and in a few years I would no longer be in negative equity. NR have panicked and will cause misery to those who find their payments shooting up overnight...like I said many cannot remortgage as there are no longer these types of mortgage available.

I have resigned myself to paying the SVR and would recommend anyone to do this and maybe switch to interest only, that'll bring the monthly cost down. Sit tight and in a few years most of us should be out of negative equity. I still think I shall complain to the FSA...NR need to be more creative than simply abandoning its customers who took out a product in good faith.

Genuinely, I do feel for the hundreds of thousands like you. The SVR will be punitive - because they will make it like that - the only good thing is that a government owned NRK will probably be lenient on repossessions and arrears when they happen.

AS for properties rising in value long term - I think we all agree, but the problem will be maintaining funding it in the medium term. And TBH, a lot of the people (other than really recent borrowers) with NRK will have taken the surplus over the purchase price and spent it (or had spent it before). That's where it gets murky as to whether people who can't really afford it (by traditional models) should be allowed to borrow. The reality for the next 5-10 years will be bad for people - and a lot of people need to be honest at what they spent the money on - for many of them, it's not the house, it's the other 21st century necessities like satellite, mobiles that they don't need, consumer electronics, cars, holidays they can't afford on wages etc. I know lots of people are not like that as well, but sadly, they will be collateral damage in this one.

Payments shooting up is a risk, you knew about that - with respect, we all gamble on that not being an issue, whether it's for a Doncaster terrace or a Belgraviagrad mansion (well maybe not them ).

And believe me, NRK has not caused the problem, except to lend to you in the first place. NRK has absolutely no option.

lotto-dreamer

The SVR will be punitive - because they will make it like that -

won't that force everyone who can bail out to do so and go elsewhere - leaving NR with little business?

I had a letter from NR recently notifying me the SVR part of my mortgage with them had just been reduced and I now pay a few pounds a month less.

I am confused.

Rachman_2

lotto-dreamer wrote: »

won't that force everyone who can bail out to do so and go elsewhere - leaving NR with little business?

I had a letter from NR recently notifying me the SVR part of my mortgage with them had just been reduced and I now pay a few pounds a month less.

I am confused.

Yes, it will - the government needs the debt down, the best (read quickest) way to do that is not to get the borrowers to pay their mortgages, it's to get them to move somewhere else and pay the mortgages off using a new mortgage advance from a new lender.

The government does not want NRK as a lender, it wants rid of it - for some pretty strange reasons (as I am sure history will record them) they put the loans and ridiculous guaranteees in and took some relatively worthless notes in return for a lot of it - the government can't run a mortgage bank - it does not want to - it simply wants it all to go away - and the best way is to lose borrowers - and fast. You will note that they have also decreed that the financial books of NRK will be secret under the Freedom of Information Act - you have to ask why that is - the simple answer is that they expect to lose tens of billions but don't want to tell us.

If you are on SVR, you must either owe next to nothing so the fees are proportionately too expensive to move (or owe under £30K so most places won't remortgage you) or you are already paying way over the odds - the SVR will have dropped because base rate dropped but over time expect the SVR to rise (or at least remain high (uncompetitively so)) if others fall.

They actually want you all to leave and go somewhere else, but they are not admitting yet (but everyone knows it's inevitable) that there are hundreds of thousands who can't move who will be left on the NRK books - and their security will be rubbish (unless house prices go up a fair bit (which in the short to medium term, they won't....). And that collateral detritus will be parcelled off and sold to a subprime lender in a couple of years when everyone else has gone (though I bet they try to defer that till after the next election) - and when that happens, those borrowers who could not leave will be up !!!!!! creek. As the good borrowers leave, the security of the loan book decreases in quality.

Crokeria

Do you think Rachman, the FSA will have anything to say about this? It still sounds unethical to punish borrowers in this way..wacking up rates when they know many cannot remortgage elsewhere because of a product NR actively marketed? Luckily I have another 18 months to go on my fixed rate and I have calculated I can afford a SVR of 7.25%..but I don't want to!!

Rachman_2

Crokeria wrote: »

Do you think Rachman, the FSA will have anything to say about this? It still sounds unethical to punish borrowers in this way..wacking up rates when they know many cannot remortgage elsewhere because of a product NR actively marketed? Luckily I have another 18 months to go on my fixed rate and I have calculated I can afford a SVR of 7.25%..but I don't want to!!

The FSA - you've got to be joking. It's supposed to be independent. It's effectively toothless and it had little idea how we got here (though like Moulton on the telly the other week, we have been scratching our heads as to how the banks kept on lending and the FSA let them) and will be loathe to interfere in the now governmental entity - they certainly don't want to be the ones who stop the government doing something and so both ruining their peerages (at the top level) or be the ones that can take the fall for being obstructive to the government's plans. They will filibuster, but they have no ability to do this.

If you want to protest, your chance will be in the election at the end of Brown's term - he and his lax lending and unwavering support of making you (and me) feel richer to support his profligacy caused this - so use your vote wisely and make sure your local labour party understand that you do not think Brown was a good Chancellor (again, foretelling history (oxymoronically) but I think that Brown will go down as an absolute disaster as both Chancellor and PM).

beingjdc

Crokeria wrote: »

I took out 110% because I knew in the LONG TERM property prices rise and in a few years...

A few years is not long-term. It took prices six years to reach the bottom in the last crash, let alone to get back to where they started.

MSE_Martin

Hi folks

Many NR mortgage holders - especially those with 100%+ LTVs (borrowed more than the house is worth) are in a horrid situation. Its a type of loan I've always hated and warned against and I'm very sorry to see that people are being hit in the worse case scenario.

Those saying "what can be done" the answer at the moment seems to be very little - some political lobbying is the best bet - as the bank is now a Govt bank. But sadly there's a balance of

Northern Rock Mortgage Holders v
Taxpayer interest

The metaphorical taxpayer wants all mortgage holders to pay back their loans so the govt is owed less; and NR putting rates up encourages that to happen as many will remortgage. Yet those who can't remortgage are being sliced to hell - its a horrid scenario; Im not sure i can think of a route at the moment

Martin

poppy10_2

Aww. Thanks for dropping anyway, Martin :money: