You are here: Home - Mortgages - Remortgage - News -

Northern Rock mortgage account sale sees 100,000 miss out on rate cut

0
Written by: Hannah Uttley
24/08/2016
Hundreds of thousands of Northern Rock customers will not benefit from the Bank of England’s base rate cut, after part of the defunct lender’s loan book was sold on to a US private equity firm.

Borrowers whose mortgages are now being serviced by Cerberus Capital Management, an estimated 100,000, will fail to see the 0.25% rate cut announced this month applied to mortgage repayments.

Last year, Cerberus bought Northern Rock mortgages worth £13bn from the government’s holding company, UK Asset Resolution (UKAR), with £3.3bn of the loans sold on to TSB – equivalent to 34,000 customers.

Those customers now being managed by TSB under an entity named Whistletree, are already benefitting from a 0.25% cut to their standard variable rate. Customers still with Northern Rock Asset Management will also receive a reduction to their mortgage rate.

Lord McFall, a founder of the New City Agenda think tank, has campaigned for Northern Rock customers to receive a fair deal from the numerous sales. In January, McFall wrote to UKAR urging for borrower protection against changes to the terms and conditions to their mortgages, while calling for an option to introduce fixed rates to allow customers greater certainty over their mortgage repayments.

In another letter sent earlier this year by former economic secretary Harriet Baldwin to Andrew Tyrie, chair of the Treasury Committee, Baldwin said that while the terms of conditions of the mortgages would remain the same, Cerberus, like any other lender, had the commercial right to raise SVRs.

McFall said: “UKAR’s failure to put in place adequate protection has left former Northern Rock customers facing a lottery as to whether they benefit from the Bank of England’s rate cut.”

There are also concerns that a securitisation deal for £2.7bn of mortgages sold to Commercial First as part of a group of firms led by JP Morgan will not benefit from a reduction to their SVR, due to the terms of the 3-month LIBOR agreement set out under the deal.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Unfamiliar banks woo savers with top rates…is your money safe?

If you’ve been keeping an eye on the savings best buy tables, you’ll have noticed some unfamiliar names lu...

What the base rate rise means for you

The Bank of England has raised the base rate by 0.25% to 0.5% – following on from the increase from 0.1% to ...

How to get help with your energy bills

The rise in the energy price cap from April will mean millions of households will pay hundreds of pounds a yea...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week