Action on repossessions has been promised by Northern Rock.
The new chief executive of Northern Rock has promised to help mortgage borrowers who are struggling to keep up with their repayments during the economic downturn. His comments come after the nationalised bank was criticised over the number of homes it has repossessed compared to other lenders.
Speaking to MPs on the treasury select committee, Gary Hoffman insisted that repossession must be a last resort and said he wants Northern Rock to lead the way in terms of introducing new mortgage rescue products that will help to minimise the impacts of the recession on the housing market.
"Above all we want to make sure customers remain in their homes," he remarked. "We make sure there are payment holidays and customers can reduce payments to stay in their home," he added, insisting he will be looking at ways to transform the attitudes of people working within Northern Rock's debt management department.
Mr Hoffman suggested the reason why Northern Rock had repossessed a larger proportion of homes than its rivals was because of defaults on its 125 percent mortgages, which he said accounted for three-quarters of all repossessions carried out by the bank.
Northern Rock recently launched a new fixed-rate mortgage range with rates starting at 3.99 percent for those borrowing 65 percent of the value of their property.
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It might be that they have just launched this new product but those people who most need it, i.e. those of its customers who have the 125% mortgages are not permitted to transfer their deal to another Northern Rock mortgage! They either have to stay on the SVR (still an uncompetitive 5.84%) or try and go elsewhere - not likely! So if they really want to 'help people' they need to start to offer new deals to existing customers and end this 'brand new customers only' rule which is so unfair to its current customers.
Tim Warren
21st Nov 2008 21:24
Some help I am getting from Northern Rock, I have just received my new mortgage / loan interest rates, effective 1/12/2008. The Bank of England dropped interest rates by 1.5%, Northern Rock passed on to me 0.15%, 7.48% to 7.33%.
I am in the same position of many exsisted northern rock customers. I took out a 100% first time buyer mortgage in April 07 fixed for 18 months. I then came out onto there standard variable rate on Sept 08 which was at the time 7.49% upping my payments to £950 a month. I liased with northern rock to try and get a better deal but was shown the door. I was told to try and get a better lender and trust me a did but because i needed more then 90% of the properties value was helped by anyone. I had to reduce myself to take in a lodger for help to pay the mortgage. Since then the rates have dropped and my payments at £650 a month which is still quite high but a massive drop for me. I'm still in the worrying mode every month incase the rates start rising again which they will at some point then i;m in the position of struggling to pay, all i get from northern rock is fall in arrears and we'll take her home!!!! To me they should be helping exsisting in fixed better deals
