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Sunday, 22 November 2009

Newsroom

Northern Rock to increase lending

  • Published: Monday, 23 February 2009

Northern Rock is to increase mortgage lending by up to £14 billion over the next two years. The government has said that it will make more money available to the bank to make it easier for people to get a mortgage.

More lending

Northern Rock borrowed £26.9 billion from the taxpayer when it was nationalised a year ago.

By encouraging borrowers to leave the bank and go to another mortgage provider it has managed to repay £18 billion so far.

The aim is to make new mortgages more readily available. The new lending will be financed partly from deposits and repayments on the existing loan book and partly through an increase in the government loan to Northern Rock and by lengthening the repayment schedule.

The bank has said that it would offer about £5 billion this year and a further £9 billion of new mortgages next year to increase the flow of credit into the economy and help first-time buyers.

What sort of deals will be on offer?

The Chancellor of the Exchequer, Alistair Darling, has said that these new Northern Rock mortgages will be on "sensible" loan-to-value ratios.

The government has made clear that it wants to see a well-functioning mortgage market where lenders lend responsibly and borrowers have access to a wide range of mortgages that they can afford to repay.

The new deals are expected to be available from April, saying: "Announcements will be made in due course as plans are finalised."

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