Northern Rock’s £14bn mortgage surge
The nationalised mortgage lender, Northern Rock, has announced plans today to increase lending over the next two years to £14 billion to Britain’s homebuyers.
Having sought out a £25 billion bailout from the Bank of England in February last year, it is now in a position to help the stumbling property industry with up to £5 billion of that lending occurring within 2009.
Despite this positive announcement it is not all good news for Northern Rock because of the tough economic times that repayment arrears of more than three months had risen sharply and so the mortgage lender will be making substantial losses.
The increase in repayments problems had been predicted and in the last three months the mortgage lender said that there have been small signs of improvement.
Since nationalisation, the bank substantially cut back its lending in order to maintain transparency after receiving government aid.
The new plans to expand mortgage lending are a timely boost for the housing market.
Last month the company enhanced the competitiveness of its products and as a result the number of mortgage applications received was up by 70 percent from the previous month.
Furthermore the quality of new lending remains high with loan to value at 48% meaning that the chances of default are much lower.