Northern Rock remortgagers could be 'left stranded'
Northern Rock borrowers on 125 per cent mortgages could be stranded when they try to remortgage after the bank withdrew the high-loan products.
There are fears remortgagers with a history of adverse credit or having high loan-to-value (LTV) mortgages could find it difficult to search for affordable deals elsewhere when their Northern Rock fixed-rate deals expire.
The concerns, raised by personal finance research firm Moneynet.co.uk, come after the ailing bank withdrew its Together mortgage products, which offer 125 per cent loans to homeowners, from the market.
It is the latest in a string of lenders which have ditched high LTV mortgages offering loans of 100 per cent or more.
Moneynet chief executive, Richard Brown, said many borrowers could be stranded when they came to remortgage.
He said: "Some of those customers who don't fit standard lending criteria – the kind of borrower Northern Rock was happy to take on before the crisis began – are likely to have many doors shut in their faces by other lenders in the current economic climate."
But other industry experts have reassured Northern Rock borrowers they will not face crisis.
One commentator even said this week Northern Rock's borrowers were the "least troubled" of all those involved financially with the bank.
Rachel Lacey, editor of Moneywise magazine, said: "To be honest borrowers and savers don't need to worry at this stage it's shareholders that have suffered really, they are the victims in this."
She urged the bank's borrowers not to worry at this stage and advised them when their mortgage deals expired and it was time to remortgage to shop around the entire market.
Katie Tucker of mortgage broker John Charcol sent out similar reassurances. She said: "If you have a fixed-rate the payments won't change and if you are on a tracker they are obliged to track the Bank of England bank rate regardless – so you are protected.
"Even if you are on a deal which is a discount from the SVR, it is unlikely that Northern Rock would subject themselves to the negative press of not reducing their SVR in line with a Bank rate cut again."
