The fundamental’s of the UK mortgage market remain wholly sound despite news that Northern Rock has had to request emergency funding from the Bank of England, says Robert Sterling managing director Kevin Duffy.
Duffy says that there is a real danger that both the industry and consumers grossly over react to what is happening to Northern Rock.
“The fundamental’s of the UK mortgage market remain wholly sound. As for Northern Rock itself, it maintains a solid and robust balance sheet which bears no relation to the knee jerk hysteria which we’re seeing in certain parts of the media.”
Duffy says that what is driving share prices down of the big banks is the uncertainty of the market based on not knowing who has exposure to bad debt.
Personal Touch Financial Services sales director Dev Malle says that he expected this to happen because if Northern Rock can not get rid of its bad book then it can not originate business.
“I think the Bank of England had to help them because they are so big and if they weren’t supported it would have a very negative impact on the market. Profits will be impacted but in the long term they’ll be okay.”
Hamptons managing director Jonathan Cornell says that people should not worry about Northern Rock because they are a fundamentally sound solvent organisation.
“Bank of England have offered them an open ended credit line and they would only step in and support an organisation if the reason was temporary market conditions. Noone is saying that Northern Rock’s loans are bad.”
Cornell says that as far as he is concerned it is business as usual in terms of Northern Rock.
“They are not going to make the profit they were going to do. It’s a shame. They will lose some market share in the short term because of the unexpected market conditions that have arisen.”