Oh dear™ oh dear™oh dear™

[BlasterBates]

It seems that NR isn't on the verge of knocking its pipe out; it's still regarded as a safe bet, long term, safer even than some banks. NR has lots of lovely property underpinning its business, which protects it well from market nasties. It's just that it's not going to meet its 15% growth target, rather than being all but finished. Also, NR may be the lender most susceptible to banks not wanting to lend, but the others aren't that far behind NR in this way. It's other banks' wariness about lending big dollops of cash that's led to this, not NR's crapness. NR's business model has always been fundamentally reliant on borrowing from other banks; it's not something new at all.

Isn't it amazing that banks react so timidly to blips? And also never seem to see that in times like this, helping each other out is, ultimately, the best thing for them all? Idiots.

Looks precarious to me, Northern Rock is "the" UK subprime lender, and has been driving the UK housing market up through lending to "low quality" creditors. If it shoves up rates to keep financing existing loans it risks getting hit by defaults, if it doesn't it could get severly hit by other banks driving up the cost of financing; coupled with that its assets are tied up in "highly valued" property so when its stops lending it hits its own assets. Between a rock and a hard place?

[Troll]

Or you could skip the queues by buying a new Barratt house, at a premium of course.

was that the ads with the guy in a helicopter?

[DBA_bloke]

was that the ads with the guy in a helicopter?

Indeed! The saintly, manly-chinned, Patrick Allen.

[scooterscot]

So can one expect some heavy breathing down the phone about my 3 year 5% apr fixed mortgage deal with the NR. "we're losing money on you Mr , hand it back"

[Billy-Bob]

In the US the banks can call in your mortgage at any time. Is it the same here?

[DBA_bloke]

Looks precarious to me, Northern Rock is "the" UK subprime lender, and has been driving the UK housing market up through lending to "low quality" creditors. If it shoves up rates to keep financing existing loans it risks getting hit by defaults, if it doesn't it could get severly hit by other banks driving up the cost of financing; coupled with that its assets are tied up in "highly valued" property so when its stops lending it hits its own assets. Between a rock and a hard place?

I see what you mean, but doubt that NR is in real trouble. As I said in my earlier post, NR is the worst-hit, but there are other lenders in similar positions. Lots of 'em.

Barclays borrowed fooking billions from the BoE recently, and they're still here.

It seems highly unlikely that some sort of crash is looming - our economy is strong, the housing market is strong (in spite of recent cooling), unemployment is falling, and the US has made it crystal clear that it's not going to stand idly by while its economy nosedives.

Every year, for 10 years, experts and pundits have been forecasting, with unerring inaccuracy, the end of the universe. It seems obvious to me that whatever yardsticks they use are useless.

[HarryPearce]

What happens if the value of those underpinning assets collapses? it's OK saying long term but companies report yearly.. so the balance sheet would look pretty fecked up

The underlying asset is not the house but the mortgage debt that "can" be traded. A crash will only come if there is a systemic loss of confidence in the market used to trade such debt underpinned by signifcant increase in mortgage defaults. The current economy medium term outlook is fairly stable, esp. when compared to the 1970's when inflation roared and unemployment soared. So there is unlikely to be a significant increase in defaults, people may just have sit tight in their current properties rather than trading up on increased property values.

Nick

[DBA_bloke]

So can one expect some heavy breathing down the phone about my 3 year 5% apr fixed mortgage deal with the NR. "we're losing money on you Mr , hand it back"

No. It's fixed.

[AlfredJPruffock]

Precisely! Unfortunately, the gits wot did it probably put large wads of dosh in their own pockets, and the legal system probably won't punish them adequately, if at all.

Money and Honour do not belong in the same purse

Icelandic Proverb

[RightLaugh]

my father in-law is queing outside northern rock as we speak. He's been waiting nearly an hour to get to a cashier to take all his money out. He says the queues are going out into the street.