Troubled mortgage lender Northern Rock has unveiled a new strategy which should see it able to lend to more people.
It means the bank will start lending to more homeowners in a bid to help kick-start the economy though there will be no impact on savers.
The move was originally part of the business plan agreed with the Government to meet European state aid rules.
But those leaving Northern Rock were putting massive pressure on the credit available at other banks.
The new strategy is part of a wider rescue package to save failing banks with a second bail-out in three months.
In a statement, Northern Rock said: ‘A key objective of the company’s original plan was to repay its Government loan, primarily through a programme of accelerating mortgage redemptions.
‘This has been achieved by actively encouraging existing customers to remortgage to other lenders, when their fixed-rate product deal ends.
‘This has been very effective and has enabled the company to reduce the Government loan well ahead of the business plan.
‘Reflecting this, and in order to support Government policy to increase mortgage lending capacity in the market, the company confirms that it is slowing down the rate of mortgage redemptions.
‘This means that more mortgage customers will be able to stay with Northern Rock.’
Consequently however, a reduced level of redemptions will lead to Northern Rock repaying its loan to Government at a slower rate.
But Northern Rock says there will be no impact on savings customers as a result of this decision and all Government guarantees will remain in place.
© Press Association 2009
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