The Northern Rock was granted emergency financial support from the Bank of England on September 2007. Northern Rock under government control then announced in 2007 that they would not remortgage their existing mortgage borrowers to a new remortgage product. In fact the Northern Rock was informing their mortgage borrowers to remortgage to another mortgage lender as they did not want to keep their business. The Government wanted Northern Rock to start off loading their mortgage book and to start paying them back.



However, they did say that they would allow their borrowers to stay with them but, only on their standard variable interest rate, which is the worst interest rate they could offer a homeowner. This was done to encourage their mortgage borrowers to remortgage to other lender. The government had decided that it wanted its risk reduced and this was a way of reducing the money owed to the government and taxpayers.

Northern Rock was notorious for their 125% mortgages on their ‘Together' product scheme. It allowed a mortgage borrower to borrow up to 125% of the value of the property or a further £30,000 unsecured loan on top of their mortgage. The together mortgage was a great product for first time buyers who had little or no deposit to purchase their first home. It was also used for people with little equity in their property and large unsecured debts to remortgage. It allowed the new borrower to consolidate their debts or to borrow money for home improvements, deposits for buy to let mortgages, holidays and weddings at the same interest rate as their new mortgage.

The Together product accounted for around thirty percent of the Northern Rock mortgage business. Most clients with a ‘Together Mortgage' have since found themselves unable to remortgage away from the Northern Rock at the end of a mortgage scheme. As their existing mortgage deals have ended they have gone onto the Banks' standard variable interest rate which is the banks worst mortgage rate, currently 5.09%. This is a real nightmare for most of these borrowers. Many borrowers have found that the value of their homes had dropped by 15% to 20% in the last year and this had exacerbated their situation. It was also feared that some of the rise in repossessions had been attributed to the aggressive stance taken by the Northern Rock at this time.

Gordon Brown and Alistair Darling said today that the Northern Rock will no longer pursue a policy of rapidly reduction of their mortgage book. They both said that their original policy had been very effective in reducing the governments' loan. This less aggressive approach by the Northern Rock will be welcome by all their mortgage borrowers as it is expensive to keep changing mortgage lenders. Gordon Brown and Alistair Darling announced that they would now be increasing the Northern Rocks mortgage lending policy once again. This is fantastic news for Northern Rock mortgage borrowers who have been unable to remortgage elsewhere due to the lack of equity in their properties and the lack of lenders offering above 90% loan-to-value mortgages.

For the second time in three months we the taxpayer are pumping billions of pounds into Britain's Banks. Gordon Brown has said that he will not sit idly by and watch good businesses go to the wall because of the irresponsible mistakes of a few bankers. He also repeats his daily political mantra about how he cares deeply about families in Britain. With this in mind, Gordon Brown and Alistair Darling have unveiled a package of new initiatives designed to get banks lending to businesses and individuals and guess what it will be underwritten by the good old taxpayer. How much all these new initiatives will cost us the taxpayers ultimately is still uncertain and no figure was given today. But, we are told by Gordon Brown, Alistair Darling that they and the treasury have it all under control and have their fingers are on the buttons. Let's pray they don't burn their fingers!

If we needed proof of how badly the banking sector is doing then the Royal Bank of Scotland has revealed record losses of over £7 billion. The taxpayers currently have a stake in the Royal Bank of Scotland of 57.9% which could increase to 70% if the government are successful in exchanging the preference share into ordinary shares. British banks are not bust yet; our government is standing by them as lender of last resort. If our banking institutes fail then our economy fails and we all become losers. Our government now want the banks and mortgage lenders to start lending again. How this will affect homeowners with adverse credit is still to be seen