Wednesday, May 21, 2008

New mortgage range launched by the Rock

Previously troubled personal loans lender, Northern Rock, which was recently nationalised has announced the launch of a new range of mortgage products, and consumers will now be able to enjoy residential short term flexible fixed rate mortgages that start from 6.49%. Buy to let mortgages are also available at the same rate, whilst lifetime mortgages are on offer from 6.99%.

Northern Rock has also introduced new ceiling limits on its LTVs, with a maximum LTV of 90% on residential mortgages, and a maximum LTV of 70% on buy to let mortgages. The bank has also made changes to its income multiple levels, which previously ranged from 2.8 to 4.9 times the borrower's income based on credit rating. This is now changing to between 2.1 and 4.5 times the borrower's income.

The government appointed chief executive of the bank, Ron Sandler, said "This is the first major review of our mortgage product range since Northern Rock was taken into temporary public ownership. The changes reflect our determination to create a viable business in accordance with our published business plan and competitive framework. While we intend to reduce our mortgage book by accelerating redemptions, we also need to maintain a presence in the UK mortgage market and originate a modest level of new loans without distorting competition. We believe this new range will help us to do just that".

Northern Rock became the first victim of a run on a British bank in nearly 150 years last year after it became known that it took an emergency loan from the Bank of England. This resulted in savers withdrawing billions of pounds in savings within the space of a few days amidst concerns that the bank was on the verge of collapse.

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