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| Rock to revive mortgage lending | Rock to revive mortgage lending |
| (about 3 hours later) | |
| Northern Rock is to revive its mortgage business with up to £14bn in new loans by 2011, the government has announced. | Northern Rock is to revive its mortgage business with up to £14bn in new loans by 2011, the government has announced. |
| The Newcastle-based bank is expected to take on about £5bn in new mortgages this year and up to £9bn from 2010. | The Newcastle-based bank is expected to take on about £5bn in new mortgages this year and up to £9bn from 2010. |
| They will be financed with money from new deposits, repayments on existing loans and more government money. | They will be financed with money from new deposits, repayments on existing loans and more government money. |
| The move is part of wider plans to restructure the nationalised lender and follows a government decision to reverse the wind-down of its loans. | The move is part of wider plans to restructure the nationalised lender and follows a government decision to reverse the wind-down of its loans. |
| 'Chaos' | 'Chaos' |
| Investment analyst Justin Urquhart Stewart, of Seven Investment Management, welcomed the move and said Northern Rock could provide inspiration to other banks. | Investment analyst Justin Urquhart Stewart, of Seven Investment Management, welcomed the move and said Northern Rock could provide inspiration to other banks. |
| He told the BBC: "They've been quietly off-market, being able to reconstruct themselves... to come back again and be able to provide a model - possibly as the world's most boring bank - for the other banks to try and imitate. For Northern Rock it is a bit of a volte-face because until now it had been under orders to wind up its mortgage operation and essentially to close down business Greg HandsShadow treasury minister | He told the BBC: "They've been quietly off-market, being able to reconstruct themselves... to come back again and be able to provide a model - possibly as the world's most boring bank - for the other banks to try and imitate. For Northern Rock it is a bit of a volte-face because until now it had been under orders to wind up its mortgage operation and essentially to close down business Greg HandsShadow treasury minister |
| "And [it will] provide more capacity into the system so money starts being lent again and that's what the British economy needs desperately." | "And [it will] provide more capacity into the system so money starts being lent again and that's what the British economy needs desperately." |
| But Greg Hands, shadow treasury minister, told the BBC the reversal of policy showed the "chaos" at the heart of government decision-making. | But Greg Hands, shadow treasury minister, told the BBC the reversal of policy showed the "chaos" at the heart of government decision-making. |
| "We've been calling on the government for some time to free up credit in the economy and to make sure credit flows," he said. | "We've been calling on the government for some time to free up credit in the economy and to make sure credit flows," he said. |
| "However, for Northern Rock it is a bit of a volte-face because until now Northern Rock had been under orders to wind up its mortgage operation and essentially to close down business. | "However, for Northern Rock it is a bit of a volte-face because until now Northern Rock had been under orders to wind up its mortgage operation and essentially to close down business. |
| "I think there will be a contrast between existing customers who are facing repossession with all these thousands of new customers who are getting very generous terms." | "I think there will be a contrast between existing customers who are facing repossession with all these thousands of new customers who are getting very generous terms." |
| Restructuring | Restructuring |
| Northern Rock collapsed in 2007 after a run on savers' deposits when it emerged it had sought government help. | Northern Rock collapsed in 2007 after a run on savers' deposits when it emerged it had sought government help. |
| FROM THE TODAY PROGRAMME More from Today programme | |
| When the bank was nationalised it pledged to reduce the amount of state aid it would borrow. | When the bank was nationalised it pledged to reduce the amount of state aid it would borrow. |
| In January the lender was given more time to pay back its £27bn government loan as part of broader government efforts to boost lending, which it is hoped will aid economic recovery. | In January the lender was given more time to pay back its £27bn government loan as part of broader government efforts to boost lending, which it is hoped will aid economic recovery. |
| Previously, the bank had been encouraging customers to re-mortgage with other lenders so it could quickly pay off the loan, which stood at £9bn at the end of December, but this policy will now be relaxed. | Previously, the bank had been encouraging customers to re-mortgage with other lenders so it could quickly pay off the loan, which stood at £9bn at the end of December, but this policy will now be relaxed. |
| To help the bank lend, the firm is to be restructured, with new mortgages and existing mortgages managed separately. | To help the bank lend, the firm is to be restructured, with new mortgages and existing mortgages managed separately. |
| The announcement follows suggestions by Treasury Secretary Stephen Timms that plans to inject more cash into the economy could happen "quite soon". | The announcement follows suggestions by Treasury Secretary Stephen Timms that plans to inject more cash into the economy could happen "quite soon". |
| He told the BBC on Sunday that the government and the Bank of England were in talks regarding so-called quantitative easing. | He told the BBC on Sunday that the government and the Bank of England were in talks regarding so-called quantitative easing. |
| Quantitative easing effectively allows the central bank to write cheques to banks in exchange for assets. | Quantitative easing effectively allows the central bank to write cheques to banks in exchange for assets. |
| Ministers hope this will encourage banks to lend to consumers, who will spend more, helping economic recovery. | Ministers hope this will encourage banks to lend to consumers, who will spend more, helping economic recovery. |
| Will these plans help you? Are you looking to take out a mortgage? | Will these plans help you? Are you looking to take out a mortgage? |
| Send your comments using the post form below. | Send your comments using the post form below. |
| In most cases a selection of your comments will be published, displaying your name and location unless you state otherwise in the box below. | In most cases a selection of your comments will be published, displaying your name and location unless you state otherwise in the box below. |