Nationalised Banks Borrowers May Face a Struggle

Fri, 29 Feb 2008

The majority of Northern Rock’s borrowers face a hike in their mortgage repayments following the bank’s nationalisation. Northern Rock’s seemingly attractive 100 per cent plus loans attracted an estimated 175,000 customers, who could be faced with an increase on annual repayments of around £2,000 on an average loan of £150,000.

Those borrowers face an extremely difficult task in remortgaging following a week in which several lenders withdrew their products from the market. Northern Rock were amongst the banks to withdraw its range of 100 per cent plus loan offers, along with Alliance and Leicester, Bradford and Bingley, Cheltenham and Gloucester and Godiva.

As Northern Rock reserve the right to charge 8 percentage points on top of the standard variable rate even if borrowers change their provider, with the rates offered by Northern Rock typically between 7 and 8 per cent, borrowers would be faced with a punitive interest rate of around 16 per cent.
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