Securitisation an option, says Rock
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Gary Hoffman, chief executive of Northern Rock, says its newly created good bank may turn to securitisation in future to fund its mortgage lending.
Last week the European Commission approved the splitting up of the lender, creating what has been dubbed a good bank - Northern Rock plc - and a bad bank Northern Rock (Asset Management). The good bank will provide new mortgage lending to support the government’s aim of increasing mortgage supply and sustaining a competitive market.
Hoffman says: “We will consider securitisation. In due course we will need wholesale funding alongside our retail funding in Northern Rock plc.”
Hoffman also rules out the possibility of Northern Rock being remutualised. He says it is not something he has discussed and it would be difficult to achieve.
Northern Rock plc will limit new lending to £4bn in 2009, £9bn in 2010 and £8bn in 2011. It will not rank in the top three of Moneyfacts’ mortgage categories for two, three or five-year fixed or variable mortgages before the end of 2011. This excludes mortgages with LTVs of more than 80% and first-time buyer products.
Northern Rock took the top position in the two-year fixed rate best buy table on October 22 but then dropped off after it repriced on October 28. It was also top of the tracker best buys on October 14 before dropping off on October 28.
But Adrian Coles, director-general of the Building Societies Association, says: “The commitment to stay out of Moneyfacts’ top three best-buys is a step in the right direction but we had hoped for a commitment to stay out of the top five.”
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