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Northern Rock Bad Mortgages

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Was listening to Pesto on R4 this morning going on about Northern Rock.

Claimed that taxpayers didn't stand a cat in hells chance of getting back their money as it had cost $1.4BN and bank was unlikely to fetch more than £1BN or £1.1BN. Apparently no chance of it becoming a Building Society again as the Yorkshire and a few other interested parties had pulled out. The chances are it will remain a bank.

However he also mentioned the Northern Rock, bad mortgages which are now also with the taxpayers (the so called "bad bank") and he said this was "good news" as they were showing a profit. :blink:

I'd quite like to know how these toxic mortgages are showing a profit exactly. Of course interest rates have been kept historically low but I wonder how many are being paid out of SMI?

Was just wondering about sending in a cheeky FOI request, because I find it hard to believe that these toxic loans are showing a profit.

Edited by John Steed

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Because they can value the houses on their books at any value they like, not what they could sell them for.

Ah right gotcha, profit in the sense of mark to myth house valuations, against the mortgage book. I was going on cash being generated from mortgage payments, less the wholesale cost of borrowing, though as its now government debt, the borrowing cost will be lower. Less of course any SMI payments (benefits payments).

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  • 343 Brexit, House prices and Summer 2020

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      • down 5% +
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