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BBC NEWS | Business | Northern Rock shares plunge 24%

Does anyone know what this would mean for our mortgages if the worst case happened and Northern Rock went bust? I watched the video on the bbc which said 'what this could mean for customers' and i'm none the wiser. Anyone work for a bank and know about this stuff? I don't want cloudesque speculation here, i need expertise.

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Guest DustyDeviada

Well, this is undoubtely cloudesque speculation of the highest order, but as far as I'm concerned if they go under my agreement with them is null and void and I get the house without anymore payments.

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Well, this is undoubtely cloudesque speculation of the highest order, but as far as I'm concerned if they go under my agreement with them is null and void and I get the house without anymore payments.

If only! I doubt that would happen though.

The loan isn't to stop the company from going under, it's still solvent. It's just to solve a cash flow problem. Northern Rock provide mortgages by buying loans from other banks and then passing them onto borrowers in smaller packages. Because of the mortgage crisis in America they're finding it impossible at the moment to find loans to pass onto their customers so they needed to go to the Bank of England to get the cash that enables them to carry on their day to day business.

In the short term it's unlikely to affect us, new customers may find it very difficult to get a mortgage from Northern Rock if they're seen as a credit risk but current customers should be ok. In the long term it's quite likely someone will try and buy Northern Rock as their share price has been demolished in the last week or so.

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Speculating here as well (although the BBC's Q&A on this mentions it as well), but I suspect one of the bigger lenders would simply buy them out if it looked like they were going to go under as they would get them at a steal.

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i know that stuff, i still want to know what might happen to my mortgage should they go under. i know i'm not meant to panic but i'm tied to northern rock for another year and i'm just interested to know what could happen in the worst case scenario so i can prepare for that eventuality. also if another company buys the mortgage would they be able to change any of it? a company bought our home insurance policy and changed the terms of it without consulting us which was a bit shitty(it wasn't anything really bad, just woulda been nice to been warned).

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Guest DustyDeviada

I'm reasonably certain that if another company bought NR you would just keep paying your mortgage to them. Could well be the case that they could change conditions though. I wouldn't worry too much just now.

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I'm reasonably certain that if another company bought NR you would just keep paying your mortgage to them. Could well be the case that they could change conditions though. I wouldn't worry too much just now.

argh! i know i'm not meant to worry to much just now, i wish people would stop saying that! i'm just concerned and want to know what would happen if they go bust. i'm not running round shitting myself or anything, i just want to know!

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If they do go under the loan will still exist and will probably be held by the administrators, so you still have to make payments:

Q&A: What if my bank or lender goes bust? - Times Online

Typical really, if I become insolvent they get my flat, if it happens to them I still get a chunk out of my payslip every month.

ah, thank you. at least that's helpful.

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Having savings or investments with NR then I would be a little concerned at the moment. Paying them my mortgage which I am, hasn't got me sweating. Just a concern and something to keep a close eye on... They are just being lent money to tide them over until the market settles, if it does. The fact that the 'Big Bank' has lent them the cash means they have some faith in the company recovering.

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The fact that the 'Big Bank' has lent them the cash means they have some faith in the company recovering.

True, however, the 'Big Bank' is known as 'The Lender of Last Resort' and this is the first time it has been used as such in 30+ years... ? also todays loan will be at a premium to NRs usual and may affect them in the longer-term once (or if) things settle down.

Be afraid, but be calm, be afraid, but be calm, be afraid, but be calm, be afraid, but be calm.......

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True, however, the 'Big Bank' is known as 'The Lender of Last Resort' and this is the first time it has been used as such in 30+ years... ? also todays loan will be at a premium to NRs usual and may affect them in the longer-term once (or if) things settle down.

Be afraid, but be calm, be afraid, but be calm, be afraid, but be calm, be afraid, but be calm.......

And that recovery may involve some additional expense being filtered down to the customers, especially if everyone starts to jump ship. Leaving them with less money to invest in the 'market' and more expenses to pay out. Best thing to do is hold firm for the time being. I'm able to look for a new mortgage in a few months, that's going to be fun o_O if I choose to do do so/need to do so...

Bloody hellfire.

I have a nice house though and enough money left over for one pint a week :up:

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Bear in mind they haven't actually taken any money from the BoE as yet

BBC NEWS | Business | Northern Rock shares plunge 23%

"Unlimited" funds have been made available at a penalty interest rate of 1% above the base rate.

I don't think it's going to have any big effect just to NR customers, mortgages are going to go up in price across the sector as a result of what's happening in the US. HBOS and the other big lenders also use the same practices that have forced NR into this situation, but they're far less reliant on it so they haven't had to approach the BoE yet, but it could happen.

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Guest DustyDeviada
I have a nice house though and enough money left over for one pint a week :up:

Pints are like women - one at a time is never enough.

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Guest Jake Wifebeater
Pints are like women - one at a time is never enough.

A pint doesn't complain when you grab another pint.

And hangovers go away.

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