|    FM Home   |    FM News   |    FM Forum   |    FM Blog   |    20th of January 2018
|   Banking  |   Insurance  |   Property  |   Mortgages  |   Economy  |   Investments  |   Credit Cards  |   Debt  |   Loans  |   Pensions  |   Companies  |  

Mortgage News feed Mortgage News

All Financial News feed All Financial News

Northern Rock traps 125% mortgage borrowers

Bookmark and Share

by Gill Montia

The demise of the 100%-plus mortgage could leave thousands of Northern Rock borrowers trapped in mortgages charging high rates of interest.

Northern Rock withdrew its range of 100%-plus loans for new borrowers last week, as did Alliance & Leicester, Coventry, BM Solutions, Bradford & Bingley and Cheltenham & Gloucester.

Around 175,000 borrowers are thought to have taken out Northern Rock’s controversial 100%-plus loans over the past few years.

They are now unlikely to be able to switch to another lender but if they stay with Northern Rock their repayments could rise by as much as £2,000 a year on a typical loan of £150,000.

Many of those taking out the loans were first-time buyers, while others simply took the opportunity of borrowowing up to 125% of the value of their property.

Northern Rock already has one of the highest rates of repossessions of any lender. Its “Together” 125% loan had been criticised by MP’s and was hastily withdrawn post-nationalisation.

Ray Boulger, of mortgage broker John Charcol, comments: “The Government is in effect a negative-equity lender, while borrowers who owe more than the value of their homes are left with few options as their chance of remortgaging onto another 100% plus deal is slim.”

Meanwhile, mortgages for up to 95% of a property’s value are also fast disappearing.

Alliance & Leicester, West Bromwich, Britannia and Barnsley building societies have all recently reduced the maximum they will lend from 95% to 90%.

Discuss this in the Finance Markets forums

Story link: Northern Rock traps 125% mortgage borrowers

News posted: February 25, 2008

Financial Services:

Related financial stories to: Northern Rock traps 125% mortgage borrowers:
Previous: «
Next: »

Visited 4625 times, 1 so far today

No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.