The Chancellor of the Exchequer, Alistair Darling, has announced that he’d rather Northern Rock to reduce its shrinking of its house loan activities. The nationalised bank has made sizeable repayments to the government for its twenty-six point nine billion loan made in February 2008, and is ahead of its repayment program. Now the Chancellor would rather see a delay in the repayment of its government loan, and a complementary delay in the number of home loans being rejected by the bank as they come up for renewal.
As part of the government’s strategy to free up the House Sales UK market, the Chancellor has therefore stated that Northern Rock is to cut its rate of mortgage redemptions. So far, and with the government’s agreement; the bank has been encouraging its Home Buyers to change to other lenders as their fixed term home loans come up for renewal. Now however, the bank has stated that it will reduce it’s rate of those redemptions of home loans from sixty per cent to 30%.
This adjusted policy will be extended to existing borrowers only, and means that more Home Buyers will be able to keep their house loan with Northern Rock. Evidently, the reduced level of house loan redemptions will mean that Northern Rock will be repaying the government loan at a slower rate, but the government is more than happy to accomodate these circumstances, because Home Buyers exiting from Northern Rock have been putting stress on the shrinking amount of credit offered at other banks. This has been a root source of problems in the House Sales UK market, but it is the opposite of the issue that was projected when the government first took Northern Rock into public ownership. At that point, several rivals feared that Northern Rock would develop into a more powerful opponent, and essentially encourage borrowers away from them. Because of that, the government insisted that Northern Rock must minimise it’s lending, and use the money from house loan redemptions to reimburse the government loan.
Industry professionals project that this most recent alteration will noticably open up house loan finance offered from other banks, and make it more straightforward for lots of other Home Buyers to find new loans. For sure, if I was trying to Sell My House right away, I’d be very encouraged by the news.
The Council of Mortgage Lenders has declared that a huge cause of the difficulty with the House Sales UK market is that competitor lenders are attempting to attract Northern Rock’s home loans, and compensate for what is fundamentally their partial withdrawal from the market. This new move should have a positive impact on House Sales UK. The only question being, just how huge will that difference be?
