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February 26, 2008 |
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NORTHERN ROCK: Withdraws Together Mortgage and Loan Deal Northern Rock plc withdrew its Together mortgage and loan deal last Thursday, February 21, 2008, leaving existing customers to remortgage at the bank's standard variable rate, currently at 7.59%, BBC news reports. A spokesman for Northern Rock told BBC "our present lending appetite has changed," adding "demand for this product has now fallen to negligible levels, so we are withdrawing it." BBC says the deal, which comprises about 24% of Northern Rock's 800,000 mortgages, allows customers to borrow up to 125% of the value of their homes. Liberal Democrats earlier criticized the U.K. government for allowing Northern Rock to continue offering the high-to-loan value mortgages, arguing they could jeopardize the GBP23 billion loan to the bank by taxpayers if the housing market declines over the coming year, the Guardian relates. "It was a scandal that the government allowed the Northern Rock board to continue marketing 125% mortgages when taxpayers' funds were at risk," Lord Oakeshott, the party's Treasury spokesman, was quoted by the Guardian as saying. Meanwhile, Melanie Bien, a director at independent mortgage broker Savills Private Finance, claimed "the demise of the high LTV mortgage is down to two things: the impact of the credit crunch and the slowdown in the housing market," the Scotsman discloses. About Northern Rock plc Headquartered in Newcastle upon Tyne, England, Northern Rock plc -- http://www.northernrock.co.uk/mortgages/ -- deals with mortgages, savings accounts, loans and insurance. The company also promotes secured loans to its existing mortgage customers. The company had more than US$200 billion in assets at the end of June 2007. * * * As reported in the TCR-Europe on February 20, 2008, Standard & Poor's Ratings Services raised its long-term counterparty credit rating on U.K. bank Northern Rock PLC to 'A' from 'A-'. At the same time, the 'A-1' short-term counterparty credit rating was affirmed. The outlook is positive. In December 2007, Moody's Investors Service downgraded to E+ from D+ Northern Rock's Bank Financial Strength Rating. The E+ maps into a Baseline Credit Assessment of B1. The bank's dated subordinated debt was downgraded to B1 from Baa1 and the undated subordinated debt and Tier-1 securities were downgraded to B3 from Baa1 and Baa3 respectively. All of these ratings have negative outlooks. Northern Rock's short- term rating was affirmed at Prime-1. |
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