Opportunities knock around the Rock

Up until now I\'ve avoided mentioning the Northern Rock situation. I\'ve considered the lender\'s staff to be victims of circumstance created by their masters and thought than any comments I could add would be unhelpful.

But as a trade magazine columnist I have a duty to alert brokers to any opportunities that might come along. So here goes.

I was recently sent a copy of a letter that NR sent to a couple who are customers of the lender. It pointed out that when their existing fixed rate deal with NR came to an end it would not be able to offer them a competitive replacement.

The letter recommends that they should remortgage with another lender and even offers to help them do so.

I know the clients concerned were first-time buyers when they took out a 95% LTV mortgage a couple of years ago.

They’ve never missed a mortgage payment and have had several promotions and pay increases over the past two years. They now anticipate they’ll be offered a ratio of less than 90% LTV by another lender. I did a bit of research on the internet and found that this is not an isolated case.

A money-saving web forum highlights at least one borrower with a 12-year exemplary track record who is having to remortgage with another lender when their existing fixed rate deal with NR expires in May. I might be taking a simplistic view but if NR is advising customers that its rates are going to be uncompetitive and that they should remortgage, won’t the best ones do just that? This will leave the lender with only poor quality borrowers who cannot strike alternative deals.

Maybe that’s what it wants having taken risk versus profit decisions, knowing it can charge the rump whatever it wants.

NR’s remaining mortgage portfolio might be riskier but maybe the profits will outweigh the risks. But come on, pay me a salary of £1m a year – whether I have to pay full UK tax or not – and I’m sure I could come up with a better strategy than that.

Nevertheless, NR’s stance presents an opportunity for brokers and as the housing market is quiet it couldn’t have come at a better time.

Brokers should know which of their customers have NR mortgages and the point at which their fixed rate deals expire.

What better opening gambit than: “I helped arrange your mortgage with NR and I was wondering if you received a letter from it suggesting you remortgage?”

I leave the rest up to you. During my online research, I even found an article suggesting that NR customers’ details would be passed to brokers. So the message is to act before NR remortgages your customers elsewhere.