Submitted on Monday 23rd February 2009
Northern Rock lead recovery
Northern Rock is to increase mortgage lending, with up to £14bn in new loans by 2011, a move which could see it return to the 90% LTV market.
The government owned bank is thought to have been given approval by the Treasury to lend up to 90% LTV. The bank will take on about £5bn in new mortgages this year and up to £9bn from 2010.
Existing mortgage customers will not be actively encouraged to leave when their mortgage deal matures and they will have more choice.
Gary Hoffman, chief executive of Northern Rock, says "This is a very positive outcome for the Company, the taxpayer and, of course, consumers seeking a mortgage. Since entering public ownership we have concentrated on reducing the balance sheet through a mortgage redemption programme, and have therefore only written a limited amount of new lending."
"I am delighted that we can now return to the mortgage market in a more meaningful way, on a commercial basis. It represents another important step in the ongoing rehabilitation of the Company, returning to financial viability and ultimately returning to the private sector."
The extra money is expected to come from new deposits, repayments on existing loans and government money.
