Hitting Rock Bottom

Following the much publicised collapse of Northern Rock Building Society in 2007 and its nationalisation last year, the Government have now granted an extension for the Building Society to pay back its £27 billion loan.

Announcing its intention to revitalise the mortgage market, Northern Rock have been allowed this further time so as to hopefully boost lending, which in the longer term could aid the economy’s downturn.

The bank had been suggesting to its customers to re-mortgage with other lenders which would allow them to pay off their loans quicker than any other way, the loan at the end of December stood at £9bn and now this extension has been allowed this policy will now be relaxed.

Chancellor Alistair Darling said it was one of a series of measures being taken to rebuild the banking system.

"It's repaid about £18bn of the loan the government made, and I said in January this year that because of the problems the mortgage market faced, instead of looking to wind down its business, it would be better for Northern Rock to maintain lending."

This announcement is good news for all first time buyers and for existing mortgage customers as Northern Rock will continue to lend but have restructured their business to allow new mortgages and existing mortgages to be dealt with separately.

Northern Rock may have earned a few spread betting customers some well needed cash over the last month or so with their dwindling performance, however it maybe wise to think again as to which direction this company is going. Northern Rock may have hit rock bottom, but are they now on their way back up?