"Let us hope that RBS, Lloyds TSB and HBOS do more for borrowers than Northern Rock managed today.
"The now Government-run Northern Rock will only pass on a 0.15 per cent cut to its Standard Variable Rate from next month, not the full 0.5 per cent cut that was announced by the Bank Of England last week.
"It is all well and good of Northern Rock to moan about the Libor rate, but most of its major rivals have passed on the full 0.5 per cent to its customers stuck on an SVR. At 7.34 per cent, its SVR is still more than one per cent above the three-month Libor rate. That makes it a very profitable part of the Northern Rock business at the expense of its most vulnerable borrowers."
MI Comment.
Northern Rock is in a position of trying to run off its mortgage book, in order to repay taxpayers, so their policy is perhaps understandable in light of the directors remit.
Andrew Hagger of moneynet.co.uk commented: "This move seems to have surprised some people, however when you realise that the strategy of the nationalised Northern Rock is to reduce its mortgage book, it is unpalatable moves such as this that may be sufficient to encourage a few more borrowers to look elsewhere for a mortgage.
Unfortunately those with a loan to value ratio of 90% plus are unlikely to find a better deal elsewhere at present and will have no option but to carry on sitting on the books of Northern Rock and paying a high price just to keep a roof over their heads."
