Northern Rock

Milarky

I see NR has announced plans to shrink it's mortgage book "to encourage redemptions". One way to do this is just by raising it rates in the hope that mortgage holders will start to shop elsewhere. But how likely is it that NR will simply offer to write off a portion of a mortgage if the customer will leave?

Say £100k is owed. NR wants 'its' money back to repay the government. If it offers to cancel 5% (or 10%) if a loan is repaid within a certain timescale (say 6 months) then that would move a lot of customers to apply elsewhere in a short space of time - and the government can get some of its money back - stands to reason.

[This all assumes that the dip in the housing market itself has not taken so much equity out of mortgaged properties already that NR customers will find it hard to remortgage now. In that case the writedowns will need to be more generous]

Anyone got a comment?

homer_j_3

The chances are somewhere between none and none.

They will simply sell the mortgages to other companies and get the income in that way. If they cannot sell the mortgages then they will actively encourage remortgaging to another lender at the end of the deal and make their rates less competitive.

Clearly the issue will be is that what happens to the 95%+ borrowers when they come off. They have no where else to go effectively. I am hoping for the sake of many people out there that someone introduces a remortgage only product but cant see that happening yet.

ajaxgeezer

Why write down when they can effectively force people to remortgage for the full whack by increasing rates? The first people to jump the NR ship would be those few that they may like to keep, the savvier more risk-free mortgage holders who would find it easier to remortgage anwyay.