View more on these topics

Rock facing dilemma on saving or loan rate

Northern Rock faces a tough decision over whether to try to lure back savers with attractive deposit rates or focus on providing competitive rates for its mortgage products.

Speaking at the Money Marketing sub-prime round table, John Charcol senior technical manager Ray Boulger said Northern Rock will face a problem if it decides to pay a top saving rate as it will then struggle to offer a very competitive rate for mortgages. Boulger said: “Clearly, the bank brand has been damaged. I think it will be relatively easy for it to recover its image with mortgage brokers but more difficult with savers.”

Alexander Hall chief operating officer Andy Pratt said: “I think most of the broking community understand the situation and will be happy to recommend Northern Rock but I think a lot of brokers in the coming 12 months will perhaps not want to recommend Northern Rock even when it is equal because they will not want to lose a sale.”

He added that it is a different situation for brokers recommending a lender when the customer has a negative view on that lender, even if that view is not correct. “I think there is no doubt that it is going to take a while to get back up to the same level of lending. It could potentially be as low as half of what it has been because there will be brokers who will have customers that feel uncomfortable,” he said.

Mortgage Force managing director Rob Clifford pointed out it was impossible to recommend National Homeloans for ages after turbulence at the firm. “Ten to 15 years later, Paragon has become a very successful brand, having grown out of the ashes of that business, so rebranding can solve these things but it can take a decade,” he said.

Recommended

Abbey £25k loan deal with 100% mortgage

Abbey is piloting a 100 per cent loan to value product, with the option of a £25,000 secured loan.However, brokers say the rate is not the most competitive in the market and Abbey’s two-year fixed-rate product only just beats Northern Rock’s Together product.London & Country mortgage specialist James Cotton says: “At 7.05 per cent for […]

Climate fund starts at the tipping point

Schroders is to launch its climate change fund this week under the management of Simon Webber and Matthew Franklin.The fund will hold between 50 and 80 stocks across five investment themes of energy efficiency, low carbon fossil fuels, clean energy, sustainable transport and environmental resources.It will look to outperform the MSCI World index and comes […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment