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Northern Rock says it could take 20 years to repay Govt loan

Northern Rock chief executive Gary Hoffman told MPs that it could take up to 20 years to clear “bad bank” Northern Rock Asset Management’s mortgage book and repay the Government loan.

Speaking at a Treasury select committee session yesterday, Hoffman said he thought it would be possible to repay 50 per cent of the loan over the next three to four years.

Northern Rock Asset Management, which was created last week when the lender was split in two, has the remaining Government loan.

He said: “It is in our interests to give customers good deals and repay the Government debt – and I think, so far, we’ve shown we can do that.”

The loan will be repaid over time by the natural maturity of Northern Rock Asset Management’s mortgage book – which, he said, means it could take up to 20 years.

He says: “I think there will be significant repayment over the next three or four years – say, 50 per cent of it would be repaid.

“But then, because we don’t want to force customers to redeem, like we were in 2008, it would be the natural maturity of mortgages that will repay the government debt.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Would it like a low cost endowment to go with that 125% loan?

  2. I find it frustrating that Northern Rock Asset Management is referred to as “Bad Bank” ,presumably because of the mortgage assets that it is perceived to hold. I have been advised by letter that my mortgage is held in this business and my mortgage is approx 20%ltv and never missed a beat. Is this a toxic asset? Please stop making references to “Good and Bad Bank”

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