Northern Rock is attracting further criticism for its persistence in offering high risk loans . The troubled mortgage lender is continuing to offer mortgages worth more than the value of borrowers’ homes, despite the fact that it has become heavily reliant on taxpayer funded emergency loans from the Bank of England. The bank is offering borrowers the chance to borrow up to 125 per cent of a property’s price, meaning homebuyers would straightaway find themselves in negative equity . This is particularly risky given the decreasing house prices .
Numerous banks have recently decreased the loans to value rate on offer, typically with a reduction of 5 per cent. With a standard loans to value rate of 85 per cent for banks who have become embroiled in the credit crisis, critics have been angered by Northern Rock’s persistence in offering 125 per cent loans given their prominent part in the UK’s economic slowdown.
Troubled Bank Criticised for Continued High Risk Loans
Troubled Bank Criticised for Continued High Risk Loans
Mon, 11 Feb 2008
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