Government to sell former Northern Rock mortgages
The Government has announced it is selling off 66,000 mortgages and unsecured loans originally held by NRAM, formerly part of failed lender Northern Rock.
UK Asset Resolution (UKAR) was created in 2010 to manage the loan books of failed lenders NRAM and Bradford & Bingley.
It's now selling approximately 39,000 residential mortgages and 27,000 unsecured loans, worth £4.9 billion in total, to investment bank Citi.
Citi has confirmed it will not be offering new mortgage deals to these customers, and as some will not be able to pass affordability checks to move to other lenders they could continue to be trapped on more expensive rates - and so would be mortgage prisoners.
But the financial regulator is currently consulting on relaxing affordability checks for those looking for a cheaper mortgage, and so could help free some mortgage prisoners - though not those who are already in arrears.
The Treasury says it's taken steps to ensure borrowers are protected, and that no one's terms and conditions will change.
My mortgage or loan is being sold - what should I do?
The Treasury says that customers whose mortgages and loans are being sold on will be contacted "in due course", although there's no need to take any action and you should carry on making repayments as usual.
It says that it's agreed a "non-negotiable package of consumer protections", meaning that all customers' terms and conditions will remain the same.
However, the standard variable rate (SVR) on mortgages could still change in future. The Treasury says any new SVR must be linked to SVRs of regulated active lenders, such as those from high street banks and building societies.
And if you want to remortgage to another lender, it says you won't face any financial penalties such as early repayment charges.
What does the Government say?
Chancellor Philip Hammond said: "Through our careful oversight of the country’s finances we are continuing to recover significant amounts of money that were loaned during the financial crash.
"Today’s sale enables us to recover the full amount taxpayers loaned to Northern Rock and Bradford & Bingley, helping us pay down our debts and strengthen our finances for the future."
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