This week, Rock set out plans to lend £14bn over the next three years, begin to offer 90 per cent loans and to stop deleveraging its book.
But chief executive Gary Hoffman said: “Affordability is the key issue. We might do some business at 90 per cent but we will test this market very carefully. It is likely that we will end up with more low LTVs as we go forward in the weeks and months.”
Hoffman revealed that there would be limits on lending or first-time buyers and also quashed the hope of existing borrowers stuck on Rock’s 4.79 per cent standard variable rate, many of whom, Hoffman admitted, would be in negative equity.
He said: “Our focus is on purchases. There is more work to be done in the area of our existing customers. We need to make sure we lend safely.”
Northern Rock says the £14bn would not be available to the entire intermediary market. Hoffman said: “We have strong relationships with some intermediaries but this is not going to be available to all intermediaries. I also wish to do more lending through our branches.”
Email Mortgages chief executive Michael White believes that Northern Rock should not be shying away from higher LTVs and instead should be looking to offer innovative deals at higher LTVs with the help of advisers.
He says: “We need clever ideas to help people get mortgages. Offering lower LTVs is just keeping the wound open and if ever Northern Rock needed intermediaries, it is now.”