Northern Rock is cutting its fixed rate mortgage interest rate and launching a new tracker rate mortgage in an effort to stay ‘middle of the road’.
The interest rates on these new mortgage deals are just above the average from other competitors in the marketplace.
When the government nationalised Northern Rock, it was on the understanding that the bank should not be competitive or appear in the top 10 best buy tables. Many lenders have cut interest rates recently so these movements from Northern Rock follow this trend without topping the best buy lists.
Hannah-Mercedes Skenfield, mortgage spokesperson at moneysupermarket, commented:
“It is interesting that Northern Rock have kept their new product launch very low key. This may well be because the products are nothing to shout about; with mediocre rates and a steep 65 per cent LTV consumers can get much better deals by going elsewhere. Consumers should shop around as there are better deals to be found, without needing such a large deposit.
“However is this fair from a government owned bank? It is a shame providers continue to launch products that fail to hit top marks, and do nothing to help increase lending.”
If the bank were to launch products to try and stimulate more lending, then no doubt there would be an outcry of unfairness, so it seems the bank cannot win right now.
What do you think, should Northern Rock start to compete more aggressively? Should it be sold so that it can do so? Or should the government hold onto the bank for a while longer?