Will Northern Rock situation affect mortgage borrowers

Mon, 17 Sep 2007

The fifth largest mortgage lending company in the UK, Northern Rock, have been all over the press in the last week due to their financial situation. The lender has faced major funding problems following fallout from the US subprime mortgage lending market collapse. Although the Bank of England has stepped in to help Northern Rock, what will the future bring for mortgage borrowers?

Whilst many savers are withdrawing their money, and millions have been wiped from Northern Rock shares, what will become of borrowers who took out a mortgage loan with the company? Although the firm may not go bankrupt, even if it does, the new owner will expect mortgage repayments as normal.

If Northern Rock does go bankrupt, mortgage borrowers will be expected to continue making their monthly repayments, although there could be changes to how these are made, and who they are paid to. Northern Rock has gone on record to ask customers to be patient, and that all borrowers with a mortgage offer face no change in their situation.
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