Northern Rock advising mortgage customers to look elsewhere

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Earlier this week, Chancellor Alistair Darling announced that crisis-torn Northern Rock was to be nationalised as a temporary measure.

Mr Darling said neither of the two private were sufficient value for money to the taxpayer. The two bids included a consortium led by Sir Richard Branson’s Virgin Group and a stand-alone solution proposed by the board of Northern Rock, led by Paul Thompson.

However, since the announcement, the beleaguered bank has been sending customers to rivals and advising its mortgage customers to look elsewhere for better deals.

Northern Rock has been writing to customers when fixed and variable rate deals are coming to an end and telling them rival lenders will offer them a better rate for re-mortgaging.

The contents of the letter included ‘we are unable to offer you a competitive deal at this time, therefore we suggest you contact an independent financial adviser who will be able to help you find the best deal available to suit your monthly budget.’

‘In the meantime, if you would like any help to find a new mortgage lender, or would like to obtain a redemption statement, you can contact us.’

This move is part of a deliberate strategy to scale down the mortgage business by offering uncompetitive rates.

However, this move questions the Government’s claims that it will be ‘business as usual’ at Northern Rock and that its mortgage lending arms will attract private sector bidders in the future.

Rates at Northern Rock were once considered some of the most competitive available but have increased considerably over the last few months.

Currently, Northern Rock’s 2-year fixed rate mortgage is at 6.99%, with a £1,995 fee – this compares to its North East counterpart Newcastle Building Society, which is offering a 2-year fixed rate at 5.25% with a £999 fee.

A spokesperson for Northern Rock spokeswoman said alerting customers to better deals elsewhere was part of the commitment to scaling back its lending after the crisis emerged last Autumn and was the fair, transparent and responsible thing to do.


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