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Rival banks are beginning to protest about the plans for Northern Rock, complaining that the nationalised bank could benefit from competitive advantages over them, taking business away.

MPs were also concerned that Rock was trying to attract new customers with offers above their homes’ worth, thereby running the risk of repossessions in the future.

This crisis doesn’t appear to be over for the Government as it would not deny claims that taxpayers face a £100mb bill for advice to be paid for from banks and lawyers during the quest for a buyer. Chief Secretary to the Treasury Yvette Cooper said: “I can't tell you what the figure is. But what I can tell you is that when a bank gets itself into trouble, inevitably there are fees and costs involved.”

As Chancellor Alistair Darling went into action in the Commons to push through emergency legislation to take Northern Rock into public ownership, he inevitably faced criticism from Conservative leader David Cameron who called for Mr Darling to be sacked. He said: “I think we have to ask ourselves, does this Chancellor have any credibility. Do people trust what he says?”

It was also, according to the Conservatives, amazing that Rock was still allowed to offer 125% mortgages, with a quarter of the debt unsecured. Rock’s interest rate on unsecured loans is 12.9%, whereas it is 13.1% at Halifax and 15.4% at NatWest.

Adrian Coles, of the Building Societies Association, felt that the assistance being given to Northern Rock by the taxpayer would 'lead to pressure being put on organisations that have not failed and do not need taxpayer support'.

CBI director general Richard Lambert, said: “It is critically important that state ownership of the bank should not be allowed to distort the savings market, through access to government funds on favourable terms.”

Prime Minister Gordon Brown re-iterated that nationalisation was a temporary measure. However, new Northern Rock boss Ron Sandler has stated that it will be 'some years' before the bank can repay its loan debts.

Posted by Peter Kenny at 08:22 AM | Permalink | Comments (0) | TrackBacks (0)

There has been a glimmer of good news for those in the housing industry, as gross mortgage lending went up in January, according to figures from the Council for Mortgage Lenders (CML).

Lending increased to an estimated £26.5bn in January, an 11% increase on the £23.9bn figure for December. The figure was still lower than most other months of last year.

Despite the snippet of good news, the CML said that it was expecting lower lending volumes throughout 2008, driven mainly by remortgage loans.

January lending figures are usually lower than those for December, but the increase comes on the back of a very poor December for the housing market.

CML director general Michael Coogan said: "Gross lending held up well in January. However, there is considerable uncertainty in the housing market at the moment and we expect lending volumes to be lower in the coming months." His forecast is for remortgaging to be stronger than for new mortgages in the short term. He added: "Home buyers might be more inclined to transact if their moving costs were reduced and the government has the opportunity to address this by raising stamp duty thresholds and cutting the rates of stamp duty in next month's Budget."

Nearly all indicators recently have pointed to a downward trend in the housing market. The number of surveyors at the Royal Institution of Chartered Surveyors (RICS) reporting house price falls was up for the sixth month in a row in January; the Halifax and Nationwide house price surveys both showed falls in house price inflation.

The UK's biggest mortgage lender, the Halifax, said that annual house price inflation was 4.5% in January, down from the previous month's figure of 5.2%.

According to Nationwide figures the annual price growth rate dropped to 4.2% in January, which was the lowest rate since December 2005.

Posted by Peter Kenny at 08:16 AM | Permalink | Comments (0) | TrackBacks (0)