John Charcol senior technical manager Ray Boulger says it’s disappointing to see that consumers aren’t calmed by assurances from the government and the FSA.
He says: “The public just aren’t buying the assurances we have from the Chancellor and the FSA. There were clearly strong messages coming across all over the weekend and people just didn’t believe it. I can understand people not believing a message from the company because clearly they’re not exactly neutral on the situation. But one might have thought they would believe assurances from the government, who frankly has got so much capital invested in this now that they can’t afford to not continue support for Northern Rock.”
He adds that if Northern Rock has the right deal for a customer, there is “absolutely no reason why one shouldn’t apply to it”.
London & Country mortgage adviser David Hollingworth agrees, saying: “In terms of our clients, if Northern Rock has the right product then we would still recommend them.”
He says: “Going forward I guess with the announcement that they’re planning to down the growth from what they enjoyed earlier in the year, I think you can only expect Northern Rock’s rates will be a little bit off the pace. So whether they will actually come up quite so frequently as the right products we’ll have to wait and see how the pricing changes.”
Hollingworth says despite the levels of consumer panic over the weekend, savers’ money is not at risk.
He says: “There’s obviously been a lot of hysteria and I don’t think people’s money is at threat, but when you get the type of exposure they’ve had, people will leap to the conclusion that their savings are at risk. Northern Rock would have seen it coming, but sadly it only goes to further their problems and it doesn’t help the bank.”
Savills Private Finance director Melanie Bien reinforces the view that consumers with Northern Rock mortgages should not be concerned.
She says: “Even if, worst-case scenario, Northern Rock is taken over then someone else will just take on that mortgage, so I don’t think borrowers have anything to worry about.
“I think the panic that’s been going on is unnecessary because the Bank of England has already rescued them and they’re not going to let them go to the wall. People’s money is safe.”
Boulger warns however that if the current financial crises doesn’t ease, more company’s will find themselves in a similar position.
He says: “If the credit crunch hasn’t improved in a months time then I think there will be other banks that will call on the Bank of England for support.”