UK Bankers Choose Mortgage Offers from Northern Rock

As we have reported earlier, the past fortnight was marked by a number of significant cuts in the interest rates on mortgage deals offered by state-owned Northern Rock. The results of the cuts are now evident: many bankers from London chose Northern Rock as prime lender not only because of the decreased interest rates, but also because of other attractive loan terms. In October, Northern Rock introduced several mortgage deals at extremely attractive interest rates of 3.69% (2-year fix) and 2.69% (2-year tracker) for a loan-to-value ratio of up to £1 million for borrowers with 30% deposits. The deals are available not only from the bank’s branches, but also from mortgages brokers. Earlier, no other British lender offered best buy deals on the same terms. Let us remind that Northern Rock committed itself to lending £9 billion in 2010 – slightly more than double of this year’s figure of £4 billion. This might be the reason why the bank expects to meet the demand from UK bankers, who rushed to UK estate agents willing to purchase multi-million properties while house prices and interest rates are at historic lows. According to Northern Rock and mortgage advisors, the bank offers attractive mortgage terms for borrowers with cash bonuses that are taken into account. As such, one of the Goldman Sachs employees, had as much as 50% of his cash bonus taken into account when his income was assessed even though he had no bonuses last year. The same information was presented by Savills Private Finance, which reported that an employee of bank Nomura – one of the mortgage broker’s clients – was offered a loan of almost £1 million. Meanwhile, Northern Rock is still not the best option for “ordinary borrowers” – those who are not rich with cash. Most Northern Rock’ s current borrowers, who earlier took out “Together” mortgage deals, now pay 4.79% in SVR, being unable to remortgage because of the negative equity they found themselves in.