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Northern Rock to sell its mortgage portfolios to repay Govt loan

Nationalised bank Northern Rock is set to sell off some of its mortgage portfolios in an effort to pay back its £22.5bn government loan.

According to a report in the FT, the bank is looking to repay around two-thirds of the loan in the next five or six years and prefers selling some of its mortgage book as opposed to relying on borrowers repaying their debt. It had previously said it would gradually reduce the loan over time by mortgage redemptions.

The report states that a number of investors have already signalled their interest in buying the loans held by Northern Rock Asset Management, which was set up as an an administrator to Northern Rock’s wholesale assets and debts.

However, it is understood the offers have so far been too low for the bank to consider selling at this time.

In January, 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.

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