Northern Rock was a significant lender before nationalisation, and its previous strategy of balance sheet reduction inevitably meant that in having to absorb business from borrowers remortgaging away from Northern Rock, other lenders had less funding available for other lending.
CML director general Michael Coogan commented: "While other lenders will no doubt be watching carefully to assess the competitive impacts of Northern Rock returning to the market as an active mortgage lender, in overall market terms anything that improves the supply of lending is a positive.
"Mortgage redemptions funded nearly all the £18 billion of the loan that Northern Rock repaid to the government. This was £18 billion that had to be absorbed by the rest of the other mortgage lenders. By removing this market pressure, other lenders as well as Northern Rock should experience an increased capacity to lend to other borrowers."
