Mortgage applications soared by around 70% between February and March under plans to boost lending, nationalised bank Northern Rock has reported.
The bank claimed it had attracted more borrowers with better deals as it puts into action a programme to increase mortgage lending by up to £14 billion over the next two years – including up to £5 billion this year.
The Newcastle-based company, which was brought into public ownership early last year, is reversing plans to shrink its mortgage book, which means it has also put back the timetable for paying back cash owed to the government.
Northern Rock’s debts
The outstanding amount owed to the state stood at £9.8 billion last month – down from an initial £26.9 billion debt – although this had risen from £8.9 billion at the end of last year as it ‘significantly’ slowed mortgage redemptions.
Northern Rock has yet to announce the new timeframe for paying back all of the government loan, but has submitted an outline for approval under a revised state aid application to the European Commission.
Customers staying on
According to the bank, around 90% of customers are now staying with the lender on standard variable rates when they come off mortgage deals, benefiting from reduced rates after the Bank of England slashed borrowing costs to a record low.
Check out the Which? mortgage finder to see if you could get a better deal on your home loan.
Mortgage arrears improve
It is also seeing signs of improvement in the number of borrowers less than three months in arrears thanks to better debt management and lower rates, although it said those in default for more than three months had increased to 3.67% at March 31 from 2.92% in December.
Northern Rock signed up this week to the government’s Homeowner Mortgage Support Scheme, which is designed to support households that have suffered a temporary loss in income by allowing them to defer up to 70% of the interest on their monthly mortgage payments for up to two years.
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