Here is the news that home owners in Surrey and Hampshire have been looking forward to reading about. This will also be great news for 1st time buyers locally too.
Northern Rock is leading the way, but now all the building societies and banks will have to follow (if they want to retain their market share), as the Government backed Northern Rock is going to make £14Billion available for the mortgage market.
Finally some “Balls” is the market, this just what’s needed to get the housing market going again.
Here’s the full story from the Financial Times
N Rock to lend £14bn to revive housing market
By Martin Arnold and George Parker
Published: February 22 2009 22:05 | Last updated: February 23 2009
Northern Rock is to embark on a £14bn mortgage sales drive to resuscitate Britain’s sluggish housing market, fuelled by a hefty injection of fresh government funding for the state-owned lender to be announced on Monday.
The Newcastle-based lender will split into a “good bank/bad bank” structure, allowing it to lend about £5bn of new mortgages in 2009 and £9bn from 2010, depending on market demand and funding, the government said on Sunday night.
Alistair Darling, the chancellor, will present the move as an effort by the government to help responsible, hard-working families get mortgages, arguing that even those with a 20 per cent deposit are struggling to get finance.
Northern Rock’s new mortgage lending will be a far cry from the aggressive policy it pursued before its crash, a business model decried on Sunday by Gordon Brown, the prime minister, who said he wanted to see an end to 100 per cent mortgages.
The Treasury has been informally discussing the Northern Rock plan with the European Commission, which last year insisted the bank quickly repay its £27bn taxpayer loan to minimise distortion to competition.
But Mr Darling argues that much has changed since February 2008, when Northern Rock’s nationalisation was a rare event in European banking and when Brussels took a much tougher line on state aid.
The government hopes that by giving Northern Rock – once the UK’s biggest mortgage lender – the firepower to increase significantly its lending to homeowners it will halt the slide in new mortgages, which hit a 34-year low last year.
By the end of December it had repaid £18bn of its £27bn government loan, allowing it to end its policy of encouraging mortgage redemptions in order to shrink its loan book.
Mr Darling has been surprised at how quickly the bank has fulfilled its commitments to Brussels and now wants to reverse that process to fill the gap in mortgage funding.
The old mortgage book will be split from its other businesses, allowing it to focus on using fresh capital from the government to finance new lending, rather than covering losses on older loans. The “good bank/bad bank” split will leave the worst parts of Northern Rock’s mortgage book in a separate vehicle, expected to managed alongside the book of the nationalised Bradford & Bingley, which is being run down.
Both are expected to come under the auspices of UK Financial Investments, the arm’s length body handling the government’s banking interests. The aim is to position the “good” Northern Rock for an eventual sale to the private sector.
The new mortgage lending will be financed by a fresh government loan of up to £10bn, as well as a longer repayment schedule for state loans still outstanding and income from the bank’s deposits and repayments.
Last year gross mortgage lending was £258bn, down from £364bn in 2007, according to the Council of Mortgage Lenders. There were 516,000 mortgages last year, down 49 per cent from 2007 and the lowest since 1974.
February 23, 2009...9:52 am
Mortgages £14Bn Available
Here is the news that home owners in Surrey and Hampshire have been looking forward to reading about. This will also be great news for 1st time buyers locally too.
Northern Rock is leading the way, but now all the building societies and banks will have to follow (if they want to retain their market share), as the Government backed Northern Rock is going to make £14Billion available for the mortgage market.
Finally some “Balls” is the market, this just what’s needed to get the housing market going again.
Here’s the full story from the Financial Times
N Rock to lend £14bn to revive housing market
By Martin Arnold and George Parker
Published: February 22 2009 22:05 | Last updated: February 23 2009
Northern Rock is to embark on a £14bn mortgage sales drive to resuscitate Britain’s sluggish housing market, fuelled by a hefty injection of fresh government funding for the state-owned lender to be announced on Monday.
The Newcastle-based lender will split into a “good bank/bad bank” structure, allowing it to lend about £5bn of new mortgages in 2009 and £9bn from 2010, depending on market demand and funding, the government said on Sunday night.
EDITOR’S CHOICE
Buy-to-let mortgage advances hit five-year low – Feb-21
Alistair Darling, the chancellor, will present the move as an effort by the government to help responsible, hard-working families get mortgages, arguing that even those with a 20 per cent deposit are struggling to get finance.
Northern Rock’s new mortgage lending will be a far cry from the aggressive policy it pursued before its crash, a business model decried on Sunday by Gordon Brown, the prime minister, who said he wanted to see an end to 100 per cent mortgages.
The Treasury has been informally discussing the Northern Rock plan with the European Commission, which last year insisted the bank quickly repay its £27bn taxpayer loan to minimise distortion to competition.
But Mr Darling argues that much has changed since February 2008, when Northern Rock’s nationalisation was a rare event in European banking and when Brussels took a much tougher line on state aid.
The government hopes that by giving Northern Rock – once the UK’s biggest mortgage lender – the firepower to increase significantly its lending to homeowners it will halt the slide in new mortgages, which hit a 34-year low last year.
By the end of December it had repaid £18bn of its £27bn government loan, allowing it to end its policy of encouraging mortgage redemptions in order to shrink its loan book.
Mr Darling has been surprised at how quickly the bank has fulfilled its commitments to Brussels and now wants to reverse that process to fill the gap in mortgage funding.
The old mortgage book will be split from its other businesses, allowing it to focus on using fresh capital from the government to finance new lending, rather than covering losses on older loans. The “good bank/bad bank” split will leave the worst parts of Northern Rock’s mortgage book in a separate vehicle, expected to managed alongside the book of the nationalised Bradford & Bingley, which is being run down.
Both are expected to come under the auspices of UK Financial Investments, the arm’s length body handling the government’s banking interests. The aim is to position the “good” Northern Rock for an eventual sale to the private sector.
The new mortgage lending will be financed by a fresh government loan of up to £10bn, as well as a longer repayment schedule for state loans still outstanding and income from the bank’s deposits and repayments.
Last year gross mortgage lending was £258bn, down from £364bn in 2007, according to the Council of Mortgage Lenders. There were 516,000 mortgages last year, down 49 per cent from 2007 and the lowest since 1974.
Copyright The Financial Times Limited 2009
Good news in all the newspapers
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