Northern Rocks Bold Plan To Jumpstart the Remortgage & Commercial Mortgage Market
- By Howard Ogollegos
- Published 10/17/2011
- Real Estate
- Unrated
Building society Northern Rock has announced changes to its remortgaging policies, which will support the latest treasury policy to boost commercial lending. This should result in greater numbers of mortgage customers being able to remain with the company of their choice while still repaying the government loan that bailed out the building society, ahead of previous projections. This step has been brought about due to government aims to gradually pace the number of remortgages flooding into the financial markets, threatening another unsustainable boom.
Remortgage deals were something to be address on the lender's agenda. It was confirmed that Northern Rock were adopting the changes not only to stay in line with the government plans, but to also to try to reduce their mortgage portfolio.
This new move by Northern Rock will see an increase in the amount of remortgage funding it is lending out, but with less 'new' contracts which they hope will help the UK economy to grow at a more stable rate.
Northern Rock will now be slightly more passive in their offerings to new customers. Competitively rated mortgage deals will be offered less assertively to new customers who have been offered deals by other providers in order to reduce the number of mortgage customers that they have.
The hope is that this new plans will help the recovery of the mortgage markets, and the lender has stated that the repayment of state money was its most important goal for the foreseeable future.
It has been reported t
hat the new plans have worked well, and that this has allowed them to continue to meet their state loan repayment goals over the past few weeks and months since the bank was bailed out during the financial crisis.
The lender is now viewed in a different light, as it shows increasing concern for the UK economy and for its customers, rather than its own profits. Although the government loan repayments may slow in the future as their mortgage client base reduces, it does mean good news for our financial markets.
The bank's decision will have no impact on other parts of the business and is designed to support the wider economy. A statement from the bank said: "...in order to support Government policy to increase mortgage lending capacity in the market, the company confirms that it is slowing down the rate of mortgage redemptions."
Whilst the change of strategy should benefit the UK lending market, Northern Rock were quick to point out that they will continue to meet targets for repaying government loans. This is in a market where remortgaging has reached the lowest level for ten years, with the Council of Mortgage Lenders reporting consecutive monthly declines in remortgage approvals of up to 20 per cent.
The decision by Northern Rock to retain more of their borrowers will come as a blow to mortgage brokers who were already facing a slow market. With fewer Northern Rock borrowers to advise, remortgage numbers may be set to fall again. With lenders still reluctant to lend and many people paying record low rates on their mortgages, it seems unlikely that there will be a sudden increase in demand for remortgages in the near future.
Remortgage deals were something to be address on the lender's agenda. It was confirmed that Northern Rock were adopting the changes not only to stay in line with the government plans, but to also to try to reduce their mortgage portfolio.
This new move by Northern Rock will see an increase in the amount of remortgage funding it is lending out, but with less 'new' contracts which they hope will help the UK economy to grow at a more stable rate.
Northern Rock will now be slightly more passive in their offerings to new customers. Competitively rated mortgage deals will be offered less assertively to new customers who have been offered deals by other providers in order to reduce the number of mortgage customers that they have.
The hope is that this new plans will help the recovery of the mortgage markets, and the lender has stated that the repayment of state money was its most important goal for the foreseeable future.
It has been reported t
The lender is now viewed in a different light, as it shows increasing concern for the UK economy and for its customers, rather than its own profits. Although the government loan repayments may slow in the future as their mortgage client base reduces, it does mean good news for our financial markets.
The bank's decision will have no impact on other parts of the business and is designed to support the wider economy. A statement from the bank said: "...in order to support Government policy to increase mortgage lending capacity in the market, the company confirms that it is slowing down the rate of mortgage redemptions."
Whilst the change of strategy should benefit the UK lending market, Northern Rock were quick to point out that they will continue to meet targets for repaying government loans. This is in a market where remortgaging has reached the lowest level for ten years, with the Council of Mortgage Lenders reporting consecutive monthly declines in remortgage approvals of up to 20 per cent.
The decision by Northern Rock to retain more of their borrowers will come as a blow to mortgage brokers who were already facing a slow market. With fewer Northern Rock borrowers to advise, remortgage numbers may be set to fall again. With lenders still reluctant to lend and many people paying record low rates on their mortgages, it seems unlikely that there will be a sudden increase in demand for remortgages in the near future.
Howard Ogollegos
Howard O'Gollegos writes for Just Commercial Mortgages.com the UK's No.1 site for the latest commercial mortgage rates and commercial property finance news.
View all articles by Howard Ogollegos