Wednesday, Feb 20, 2008
Nothern Crock says it has reformed!!
Telegraph: Northern Rock borrowers told to go away
Northern Crock has told independent financial advisers to encourage homeowners who are remortgaging to obtain loans with other banks. Melanie Bien, director of mortgage broker Savills Private Finance, said: "Northern Rock is encouraging existing clients to go elsewhere. We have had them come to us, saying that for people at the end of their deals they do not want the business any more. They just want to be a savings bank." In the past few weeks that Rock has written to existing borrowers whose deals are due to expire, offering no new competitive loans to renew borrowings and instead advising them to speak to an IFA about mortgages elsewhere. Well better late than never. Although I am not sure what the other banks will say if the Crock nicks all there savings customers!
7 Comments
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1. stillthinking said...
Well, I was totally wrong in thinking Labour would allow all the mortgages onto their books and thereby support the market. For mortgage holders though, their options seem to be getting rather limited in terms of good deals, particularly as all the resets now come from 2005 if they are three year deals.
So the real pain will come for the resets of 2009,2010. As usual the hpc is a painfully slow affair, but looks as though the 4/5 year stagnation is too too optimistic given that the major problems will start in late 2010, when those unlucky enough to buy at the peak try to remortgage. So the repossession figures are going to rise for the next 4/5 years.
So the next time it will be a good time to buy a property will be in 10 years !! In other words, a long long time. I want one before then. Perhaps I should think of the UK as coming off the owner-occupier idea.
When will bl**dy london rents come down? Personally I can't save enough to make an advantage.
London Rent Crash. That would be a better name for the site.
2. Sold My Soul To The Never Never Never said...
Like I said yesterday's posting - looks like they will get rid of all their good mortgage business and be left with the heap who can't take their business elsewhere but will have plenty on deposit as they are offering high interest rates and when it comes to balancing the books at the end of the day it will look like they are doing good business. Nice one!
3. paul said...
I think there have already been complaints from other banks about Northern Rock's current position.
Brown, anxious not to jeopardize his future career options with the banks will not want to upset them by threatening their oligopoly.
4. An Bearin Bui said...
Well isn't that just dandy: having ensnared a large sector of people onto 125%, 100%, interest-only and liar loans, now Northern Rock decides its borrowers aren't desirable anymore and wants to offload them onto other banks. I agree that there is no other way to manage the situation as, clearly, the government can't be seen to offer such dubious credit to dubious customers but I wonder what other banks will have to say about this? Do they want all the junk and subprime on NR's books? Probably not. No-one wants these mortgages on their books as everyone knows they are toxic - that's why NR couldn't be sold to a private bidder in the first place.
And to think a bit of regulation early on could have stopped this entire mess and prevented the insane run-up in house prices of 2005-2007...
5. techieman said...
@ ST - takes courage to admit when you are wrong, if only others (eg in government) could do the same (spose though they would spend all their time doing that!). The issue is one of transposition, I think it was pretty obvious that they would try to encourage a higher proportion of retail funding, while at the same time paring the loan book. The problem for them is the mortgages they get left with. As highlighted here, they obviously want a average lower LTV (just in case HPC), so its gonna be both a carrot (to attract savings) and a stick (to get rid of the remortgagors), Only then will they have a decent package / model to sell on. Until then the margins will be pretty slim i would guess. Now how the EU interprets this - that should be of interest!
6. happyrenterz said...
Nationalisation can’t save Northern Rock from downgrade - FT Alphaville
'Another one for the counter-intuitive pile. Rather as Northern Rock CDS rose after the government decided to nationalise the bank (before tightening sharply) the bank has just been downgraded by Moody’s.
"London, 20 February 2008 — Moody’s Investors Service announced today that it had downgraded to A2, with a developing outlook, the long-term bank deposits and senior unsecured debt of Northern Rock plc (Northern Rock) following the announcement by HM Treasury on February 17 that the government will enact legislation to take the bank into temporary public ownership. The bank’s preference shares were downgraded to C from B3."
Why? Nationalisation “does not improve immediately the intrinsic credit profile of the bank.”
This is the outcome of a review initiated last September. But National Rock’s Bank Financial Strength Rating (BFSR) has been kept at E+ - which on downgrade last December Moody’s said incorporated a low probability that the bank may be liquidated - to reflect the agency’s view that it will take some time for the new regime to shore up the bank’s franchise and financial position. One shred of good news for HMT - the outlook on Northern Rock’s BFSR has been changed to ‘developing’ from ‘negative.’
In fact, what the Gord giveth with one hand - in terms of support through restructuring and additional security to senior debt holder and depositors - he may taketh away with the other.
"The change in outlook to developing reflects the uncertainty of nationalisation on the bank’s ability to compete in the mortgage and savings market in the UK within the confines of EU State Aid regulations."
And that uncertainty, and potentially proscribed range of movement, could hamper the process of rebuilding the bank’s franchise and financial footing.'
7. techieman said...
Whoops - Transition even!