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Original poster

Northern Rock??

64 replies

hex · 14/09/2007 07:09

We've got a mortgage with NR with a cash draw down facility...should we be worried? Is what's going on likely to affect mortgages?

OP posts:
Twiglett · 14/09/2007 07:29

no, bank of england have stepped in to bail it out .. there will probably be a financial penalty to NR .. and most probably they'll end up selling out to one of the bigger banks

lizziemun · 14/09/2007 07:45

No.

I think i heard on the radio last week about one of the major banks (Barclays I think) doing a similar thing last week. But that didn't make the main news.

biglips · 14/09/2007 07:47

it was worrying to watch that last nite but phew.

Theclosetpagan · 14/09/2007 08:08

Personally (and this is purely a personal issue) I HATE NR with a passion. My Mum and Dad were repaying a loan to them until my Dad had a serious accident last year which meant he could not work. NR have phoned almost daily to harrass them because they are getting less than the agreed repayment. The liklihood is that my Dad will never go back to work but these bastards cannot get that into their thick skulls. I've had my Mum on the phone in tears so many times over the last few months.

Forgive me if I wish NR all the ills possible.

...and yes - I have heard that NR were not the first to ask the BoE to step in - and also that this is not all that unusual. BoE would not have stepped in if they felt NR were not a viable business.

Upwind · 14/09/2007 08:25

premarket share price down more than 20% according to yahoo

Now is that because of the bbc or is there more we don't know?

Theclosetpagan - I am guessing any bank would behave the same way. My BIL had similar issues after a serious accident, only when he sent them proof of his injuries they suspended the debt.

RubberDuck · 14/09/2007 08:35

So what happens to your mortgage if your mortgage lender goes bust?

I mean, I'd like to think that the debt gets written off... but it's unlikely...

Upwind · 14/09/2007 08:52

Check your terms and conditions to find out.

You will still have to pay back the loan and it might be possible for them to call in your loan now.

pacinofan · 14/09/2007 11:16

Hex, we are in similar position and just about to use the drawdown facility to fund our building work. I heard the news on radio 4 this morning and felt sick with worry, but I have just got off the 'phone to Northern Rock and no worries, the cash is there for us whenever we need it. Phew!

BobbyGrantycal · 14/09/2007 11:19

We have a NOrthern Rock mortgage. The guy on BBc breakfast news played it all down saying there was no major worrying.

However, the idea that they could call back the loan NOW is very scary.

I am going to have to dig out the terms and conditions.

Upwind · 14/09/2007 11:21

The Bank of England has bailed them out - it is the first time anything like this has happened since the 70s. In a way it raises all kinds of questions of moral hazard.

The expectation is that some other bank will now take them over.

BobbyGrantycal · 14/09/2007 11:23

I ought to be more knowledgable about such things. But, if another bank takes them over, what will happen to the mortgages?

Ours is fixed rate until April 2008

EmsMum · 14/09/2007 11:25

DH and I have some money invested with NR, having started reading FT
last night and more this morning we are not
bailing out. It should be ok for lenders and investors. Wouldn't like to be a shareholder though, thats a different matter entirely.

Original poster
hex · 14/09/2007 12:05

yes..what will happen to our mortgages? does anyone know ...?

OP posts:
Gobbledigook · 14/09/2007 12:12

'So what happens to your mortgage if your mortgage lender goes bust?

I mean, I'd like to think that the debt gets written off... but it's unlikely...'

Oh RubberDuck - wouldn't that be marvellous?!

Now, what's going on - I didn't see the news yesterday.

justaphase · 14/09/2007 12:13

I don't think anything happens to the mortgages - whoever buys NR has to honour their obligations so it should have no impact at all.

LIZS · 14/09/2007 12:14

They were pretty reassuring on radio today . Mortgages could simply be transferred to another lender without you even noticing if it came to it but it is very unlikely to be more than a blip. Not sure if people realise that your bank account could be managed by them even though you ostensibly bank elsewhere - apparently my L and G account is (which interestingly I withdrew a substantial amount from only last week !)

Upwind · 14/09/2007 12:17

"Not sure if people realise that your bank account could be managed by them even though you ostensibly bank elsewhere - apparently my L and G account is (which interestingly I withdrew a substantial amount from only last week !)"

substantial enough for them to need help from the BOE??!!?

AttilaTheMeerkat · 14/09/2007 12:17

Unlike many other mortgage lenders Northern Rock relies on borrowing from other financial institutions, rather than using customer deposits. As the sub-prime mortgage crisis in America has spread contagion around the world the money markets which Northern Rock borrows from have seized up.

Last month, Northern Rock admitted it was struggling to raise money in the markets and in June was forced to issue a profits warning. The lender is now the highest profile UK casualty of the so-called credit crunch reaping havoc across the world.

LIZS · 14/09/2007 12:21

lol I wish !!

CantSleepWontSleep · 14/09/2007 12:48

LizS - NR bought out the L&G about 5 years ago. You should have received letters telling you about any impact (or lack thereof) at the time. Our mortgage was with L&G, and NR have been totally crap at managing it ever since, so much so that we are looking into remortgaging elsewhere.

Original poster
hex · 14/09/2007 13:04

They 'lost' £40000 of our money once, and then after endless telephone calls, credited us with it plus an extra £40000 (!!)We wondered whether we could see this as a compensatory gesture but morals got the better of us and we had to telephone them (three times!!) to convince us they'd made yet another cock-up..albeit in our favour...took a long time to convince them...our mortgage went down to £27k at one point (lovely while it lasted)

OP posts:
LIZS · 14/09/2007 13:36

dh used to work for them (L and G that is not NR) - ironically he set up their bank - and has just explained it again that they use L and G 's name under licence but aren't actively taking business into those accounts ! I did know it was now a NR account as I had long conversations last week with them over my transfer , they kept stalling over possible id fraud

hecciesmum · 14/09/2007 14:21

In the incredibly unlikely event that Northern Rock were to go bust your mortgage would be resold onto someon else probably. Upshot is that you would still owe the money, your terms would not change and you would still make the repayments, just possibly through a different lender.
They are NOT going to go bust - they have a liquidity and funding shortfall for the short term....
of course ...if everyone takes their money out then they could end up illiquid and have to be rescued.....someone else will step in and buy them in that case...

Gobbledigook · 14/09/2007 18:14

OK, I am panicking not then

margosbeenplayingwithmynoonoo · 14/09/2007 19:43

I was very sad to see the amount of people queueing outside the Northern Rock. They had PCSOs to control the crowd. Some people were waiting 6 hours to get their money out.

I drove past the branch at 7pm and they still had a queue outside. I really feel sorry for their staff.

The media provoked a real frenzy, irresposible imo.