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.