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19/01/2009 Northern Rock Strategic Review

Please Note: This article pre-dates the company restructure of 01 January 2010

 

Change in redemption policy supports Government objectives for the mortgage market

The Board of Northern Rock (the "Company") continues to engage with HM Treasury ("HMT") in a review of its business plan and strategic options.

A key objective of the Company’s original plan, previously announced in March 2008, was to repay its Government loan, primarily through a programme of accelerating mortgage redemptions. This has been achieved by actively encouraging existing customers to remortgage to other lenders, when their fixed rate product deal ends. This has been very effective and has enabled the Company to reduce the Government loan well ahead of the business plan.

Reflecting this and in order to support Government policy to increase mortgage lending capacity in the market, the Company confirms that it is slowing down the rate of mortgage redemptions. This means that more mortgage customers will be able to stay with Northern Rock. A reduced level of redemptions will lead to Northern Rock repaying its loan to Government at a slower rate.

The Company will continue to work closely with the Government in reviewing its business plan. A full statement will be made in due course once the strategic review is complete.

There will be no impact on savings customers of Northern Rock as a result of this decision and all Government guarantees remain in place.