It should probably come as no surprise that mortgage lending by Northern Rock has taken a nosedive since it hit the headlines for having to go cap in hand to the Bank of England for extra funds in September. The bank has seen an 80% fall in mortgage lending as it has deliberately tried to slow down lending to reduce the effects of its crisis. Maybe it has gone too far.
Northern Rock has pulled more than a hundred of its mortgage products since mid-August and increased mortgage interest rates, and mortgage arrangement fees.
Industry experts are now suggesting that the bank may even fall into net negative mortgage lending before the end of 2007 as existing borrowers desert the ship as well as a lack of new customers in the light of less competitive mortgage deals.
Northern Rock has seen a complete turn around from the period leading up to the crisis, when it was taking one in five of new mortgages in the UK in the first half of the year. Its market share has dropped dramatically since those heady days.
Managing Director of Premier Mortgage Services, John Malone, said his group averaged lending of around £500m to £700m a month, with a peak of £950m, but new business via the group fell to a mere £250m for September, and is expected to be even lower for October.
Price comparison website Moneyfacts reported that Northern Rock cut its product range from around 200 products in summer to around 70 in October, and interest on some of its fixed rates was a full percentage point higher than some of its main rivals in some cases.
The bank itself was only willing to confirm that its mortgage activities has been purposely slowed down since mid-September.
The bank still awaits a firm bid for its operations
Wed, Nov 14, 2007
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