Well, the Northern Rock fiasco continues to roll ever onwards!
While your savings may be safe as they have been guaranteed by HM Treasury, if you are a mortgage customer with Northern Rock then you need to pay attention!
That's because Northern Rock is axing two-thirds of its mortgages in its first product shake-up since it applied to the Bank of England for emergency funding!
On Wednesday Northern Rock closed down many of its lower margin mortgages, reducing its range from 213 mortgages to 70 as a sale of the bank edged ever closer (Northern Rock's advisers yesterday met with those representing potential bidder JC Flowers, the private equity group).
Northern Rock said they are "simplifying" and "streamlining" their mortgage offerings, as well as responding to the current market conditions.
It doesn't come as a complete surprise as all mortgage lenders are now charging more for their money since the Bank of England's rate rises!
But the lending crisis that has happened between banks has all but closed the growing g niche market for lending to so-called sub-prime borrowers in the UK, making loans to these borrowers either very expensive or simply impossible to obtain.
At the same time, certain mortgage deals for more creditworthy borrowers, which track either the Bank of England's base rate or the inter-bank lending rate, have also become more expensive to maintain.
Thus, because of their need to cut costs, Northern Rock is reducing the number of different mortgages available; however they are still prepared to lend up to 125% of a property's value through a combination of secured and unsecured loans.
So what changes can you expect?
- From Thursday it will no longer offer you a range of different rates with different loan to value (LTV) ratios. Instead it will offer you one rate for all loans of up to 95% of a property's value.
- It is also pulling its 1½ year fixed rate mortgages and removing the option for you to get cash back at the end of your deal to help cover costs.
- The removal of enhanced income multiples if you are taking out fixed rate mortgages for 5 years or longer, with Northern Rock now offering you mortgages of between 2.8 times and 4.9 times your salary (depending on your credit rating and how much you earn) on all its mortgages.
- It is also removing its 3-year fixed rate and variable rate "Together" mortgages, which enable you to borrow up to 95% of your property's value with an unsecured loan of up to 30% of its value capped at £30,000.
- Northern Rock will continue to offer its Together mortgage as a 2 year and 5 year fixed rate option.
- But despite these changes, Northern Rock said rates on its fixed and variable rate mortgages remained unchanged on a like-for-like basis.
Northern Rock spokesman Ron Stout said: "Our product range has been refreshed to reflect current conditions. We will continue to lend in a prudent and responsible way and maintain the excellent quality of our mortgage book that still has defaults of less than the industry average."
Commenting on Northern Rock's decision to cut mortgages, the information service Moneyfacts said the bank was merely trying to cut its costs.
"The move towards more of a one-size-fits-all product structure, by simplifying and streamlining products, brings the Northern Rock range more in line with the rest of the market," said a Moneyfacts spokeswoman.
"[It] is more of a sign that it is looking to reduce operational overheads, rather than anything more sinister," she added.
However, that may not convince a number of you who currently have your mortgages with Northern Rock, and let's hope these changes do not promote the same kind of panic that effected those o you that had savings with them!
So, how will these changes affect you?
As an existing Northern Rock customer, you are are unlikely to be affected. It is only likely to effect prospective mortgage customers.
For more information visit their mortgage page.
Alternatively why not phone them on direct on 0845 60 50 500?
(But its a premium rate line and costs the earth, save yourself money by calling their local numbers instead: 0191 437 0003 or 0191 279 4828)
Northern Rocky?