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Fears rise as Rock releases competitive fix

Northern Rock has launched a new mortgage range including a highly competitive two-year flexible fixed rate from 5.89 per cent.

The move comes despite concern from some in the industry that the nationalised bank is competing unfairly for business.

Last month, the Building Societies Association wrote to the European Commission, expressing its concerns.

The association’s head of policy Neil Johnson says: “We do not mind fair comp- etition but we are concerned about Northern Rock’s pos- ition and how it competes.”

The two-year fixed rate of 5.89 per cent has a maximum loan to value of 75 per cent and has a fee of £1,495.

London & Country tech-nical manager Richard Morea says: “It is very competitive. There are a lot around at a similar level but this seems less restrictive. However, it s only on purchases so it will have a limited market right now. The remortgage opt- ion is not as competitive but all these products will be in the mix and Northern Rock will pick up business with this one.”

The Mortgage Practitioner principle Danny Lovey says: “This product is hitting the right buttons but where are they getting the money from to lend?

“There are those with a Together mortgage now stuck with Northern Rock on a 7.49 per cent standard variable rate with no equity and nowhere to go. They are the ones subsidising this competitive deal.”

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