State-owned bank Northern Rock is to offer more mortgages following the government's decision to reduce the repayment rate of its debt to the taxpayer.
Customers at Northern Rock will no longer be encouraged to seek mortgages elsewhere when their deals expired, the nationalised bank has said.
The Rock had previously sought to reduce its lending in an effort to boost its balance sheets and pay off the debt it owes the taxpayer. However, in line with government attempts to increase mortgage availability and help the ailing housing market, it has changed its previous policy.
It was announced yesterday that, as part of the government's new bailout package for the financial system, the bank would be given extra time to pay off its debt to the public purse. "This means that more mortgage customers will be able to stay with Northern Rock," the company said in a statement.
However, it added that it was "well ahead of the business plan" in terms of paying off what it owes and it will now see the rate at which it has to pay off the debt reduced. "There will be no impact on savings customers of Northern Rock as a result of this decision and all government guarantees remain in place," the statement claimed.
Liberal Democrats' Treasury spokesman Vince Cable said his party welcomed the news but added that it should have come far earlier. "The financial system is in a very different state from when the terms of the nationalisation of Northern Rock were agreed. The Liberal Democrats have been calling for several months for Northern Rock to concentrate on lending to solvent businesses and individuals."
