I am an independent mortgage broker and do not agree with some opinions expressed in the posts I am reading. Northern Rock are not a reckless lender as demonstrated by their solid mortgage book and low level of defaults. In fact they are quite strict on who they lend to and have a very small and recent exposure to UK sub-prime business. Their products and who they lend to were not to blame for the recent problems; it was how they source the funds.
As for having expensive products; you really have to compare like with like and that may take more than 30 seconds on the moneysupermarket website for a glib 'comparison'. Actually, their rates are competitive for the borrowers they are aimed at. I have placed many clients with this lender as they enabled perfectly good borrowers to start paying their own mortgages - rather than their Landlord's.
Less hysteria please!

Julian, London, UK

Anyone remember the Farepak customers being generously backed by Government cash? If the working class man or woman suffers, ths Government couldn't care less. Not thier responsibility says the cabinet, throwing their collective hands in the air. (A bit like the reason behind the fake independence of the Bank of England. Deny accountability at all costs and pass the buck.) But there are other motives for the bail out of Northern Rock which include hoping the bank will be bought before Brown has to spend any cash and stoking up the chimera of the housing market.

E Craig, Gourin,

With the tax payer propping up Northern rock, it seems its business as usual. But I fear these props are going to fall.

roger, london,

It sounds like Northern Rock are just digging themsleves into a bigger hole, they are delaying the inevitable and I agree, they perpetuating a proprty bubble by their vastly reckless lending . If I had any money with them, I would certainly move it out.

Sue, Wilts,

Let's face it, there is a vested interest by the powers that be to keep the game going otherwise the FSA would have stepped in by now. At the end of the day it is now obvious that enormous pressure was put on Mervyn King not to let us see a naked emperor, although his courtiers were looking the other way when he was disrobing in public. It is a shame that those who we have entrusted with our affairs are simply not capable of taking the hard and difficult decisions that come with leadership. However the crash they were trying to prevent has already started and it will be hard and painful for the simple reason that it was postponed for so long.

anthony, london, England

Don't Northern Rock have one of the lowest arrears books around? How does this effect the current situation NR find themselves in?

Paul, Newcastle,

The point is not whether the Northern Rock Deal is a good one for the lender or the borrower. The real issue is the reckless 6x multiple of earnings that is being offered. The banks should be tightenning their lending criteria and most especially Norther Rock. Let's get back to 3.5x or 4x earnings. Howvever, the problem with this is that the whole housing market bubble is built on these multiples and particularly the first time buyers and buy-to-let speculators who have provided the fuel.

Steve Marchant, Torquay, Devon

Increased factoring should be stopped! Its reckless.

Lets get back to 1:5 factoring with the proof of income / security rather than self accounted lending. No exceptions.

Lets get steady borrowing back. All that factoring does is drive house prices unsustainably up for today, with the pain and house price fall tomorrow. Its a institutionalised pyramid system that eats away at peoples surplus money once they have paid the mortgage. 1:6 factoring is simply extending lending too beyond what people can afford long term via their income which will never keep pace of house prices if this practice continues. Lets stop it.

Rob Smith, London, UK

Ray Boulger - whether or not it compares favourably with competitors is irrelevant. Why, only days after being effectively nationalised, and with no buyer in sight is this bank writing new business full stop???

PJ, London,

If Alan Greenspan is right and inflation is going to take off in a a year or two,then God help the UK.
Everybody complains when the rate payable on a loan is around 6%,what will happen when the rate goes up to,say, 9% plus and applied to excessive borrowings!
The country will go down the tubes!
Borrowing levels must be restricted,if necessary by law,and if this rsults in a drop in house prices,so be it.
The alternative not too far down the road is a true catastrophe,that will make the Northern Rock affair look extremely small peanuts.

Nic, Royan, France

There used to be a form that was completed to ensure you could afford the load after paying for all your normal bills etc. This form could not be bypassed and meant that if you could not afford a mortgage you did not get one.

The government of the time removed the requirement for this and we saw an immediate 100% mortgage and now 117% mortgages that people can not afford.

The banks that give out these loans should not be propped up by the bank of england as they make commercial decisions, make huge profits and as in this instant can make equally large losses.

joseph Kellie, Edinburgh, Scotland

Mr Boulger (who, I believe works for a well known mortgage broker) has pointed out that the Northern Rock offer is not good value. Fair enough, but aren`t his comments typical of an industry that is virtually "forcing" ever higher level of debt on first time buyers ?

Mr Boulger, why don`t you point out that a person on a £30K salary would be well advised to not take on a £180K mortgage, rather than pointing out that a "better deal" is available ?

Andrew, Birmingham,

Strictly speaking, sub prime lending is to those with a poor credit history, but UK lenders are awash with borrowers on earnings multiples of 5 and 6. If you then add the huge self certification "business", it seems the majority of lending in recent years would by normal people be classed as sub prime.
Such a change in attitude, normal folk say something is rotten but those cautious and ultra conservative bankers have become cavalier dispensers of cash.
Its amazing what a few years of exceptional access to low interest carry trades and escalating bonus's will do to rational codes of lending. Greed as always wins in the end.

P Davies, London, UK

"Product fee" - surely this is just a lump sum interest payment up front ?

Such terminology fools no-one , and probably fronts some bonus package for the sales operator.

ziz, Manchester, UK

And whats the FSA doing about it? Having another cup of tea no doubt and finding much more important things to do like filling out expense claims and planing what to do on their next sick leave.

d case, newquay,

In order to get the executives bonuses paid thay have to make a payment to shareholders. How else are the greedy executives going to justify their cut? Their millions in shares are now worth a lot less so they'll doubtless award themselves a wad of cash before the death of the bank.
The shareholders should lose all their money when a bank goes down, that is the way of risky investment. You buy shares in a dodgy business that takes gambles for high reward, sometimes you lose. When the bank has floundered there should be a criminal investigation into any dubious payments to executives beforehand.

David Thijm, Stourbridge, UK

Mr Boulger may say there are better mortgage deals on the market than the Northern Rock one offered to the Sunday Times journalist, but he has missed the point unless these alleged "better deals" are lending six times annual salary to borrowers at these "better rates". I'm certain they are not and I am certain they are also not offering negative equity mortgages at any rate of interest. Everyone has been going on about the unprecedented dry-up in inter-bank lending which has caused the present Northern Rock crisis but what has been almost missed is the reckless lending policies of Northern Rock which were almost certain to end in disaster as they were taking place at the end of a housing boom. The Northern Rock executives are lucky they can blame the dry-up in inter-bank lending and get the Bank of England to bail them out. If their lending policies had caused the problem then no-one would have bailed them out and the poor lenders and share holders would have had to pay the price.

Alan Gold, London,

Oh there's a surprise, pretty much backs up King's earlier desire not to just chuck cash at irresponsible lenders. Still it would seem unlikely that any NuLab politician would understand the concept of moral hazard.

Percy, London,

Can't people understand? Northern Rock and the others like it are simply trying desperately to shore up the house "prices" ehy have hyped and hiked up for years. They have created a pyramid selling scam, and built the bubble in "prices", which are ludicrous and totally unrealistic, bearing no relation whatsoever to real incomes. The whole thing is a massive, manufactured bubble!!

Geri, Lincoln, UK

What we have missed is the fact that banks mortgage brokers are no longer salaried, but are now on commission, meaning if the loan doesn't get approved, they don't get paid. So they are not looking out for the banks' interest, but rather their own.

Their need to cut their payroll expenses is coming back to bite them in the bad loan department.

Chris, bedford, massachusetts

"One option offered was for a fixed two-year rate at 6.29% with a “product fee” of £1,995. The deal offered is not market leading but compares favourably with competitors."

The current best value 2 year fixed rate for the £180,000 mortgage on a £200,000 purchase in this example is a 4.99% fixed rate to 30/11/09 with a product fee of £1,800 offered by West Bromwich Building Society. This would save £4,680 in interest over 24 months (over 20%!) and £195 on the fee, compared to the Northern Rock mortgage. Furthermore it lasts 2 months longer as the Northern Rock fixed rate expires on 30/9/09, meaning that anyone applying now will not get a full 2 years.

Far from being a deal that "compares favourably with competitors," the Northern Rock mortgage is one of the most expensive 2 year fixed rates on the market!

Ray Boulger, London, England

"One option offered was for a fixed two-year rate at 6.29% with a “product fee” of £1,995. The deal offered is not market leading but compares favourably with competitors."

The current best value 2 year fixed rate for the £180,000 mortgage on a £200,000 purchase in this example is a 4.99% fixed rate to 30/11/09 with a product fee of £1,800 offered by West Bromwich Building Society. This would save £4,680 in interest over 24 months (over 20%!) and £195 on the fee, compared to the Northern Rock mortgage. Furthermore it lasts 2 months longer as the Northern Rock fixed rate expires on 30/9/09, meaning that anyone applying now will not get a full 2 years.

Far from being a deal that "compares favourably with competitors," the Northern Rock mortgage is one of the most expensive 2 year fixed rates on the market!

Ray Boulger, London, England

It is a shame!

Michele, Richmond,

Why aren't the directors charged with malfeasance? They're trading recklessly and throwing away their depositors' money,

Bruce Robertson, Brighton,