The housing crisis does not appear to sparing many home mortgage companies, particularly those that were up to their balance books in subprime mortgages. Although there have been a few signs on hope in the home mortgage market, it is clear that it may take years to undo all the damage that has been done and many home mortgage companies will never be the same. This is certainly true for Northern Rock, a home mortgage company that has been at the center of the housing market firestorm for some time, thanks in a large part to their numerous subprime loans.
Ray Boulger at broker John Charcol said: “Northern Rock previously tried to discourage existing borrowers from staying on its books by keeping its rates high. However, those borrowers coming to the end of a fixed-rate who still have more than 90 per cent of their property value to repay have found it near-impossible to get deals elsewhere.
“This means that the Rock has been left with a lot of high-risk borrowers. These new rates are aimed at attracting low-risk borrowers with large deposits, in order to achieve a better balance between high and low risk custom.”
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