Sixty-six thousand mortgages and unsecured loans originally held by NRAM, formerly part of failed lender Northern Rock, are to be sold.
The Government has announced that UK Asset Resolution (UKAR) which was created in 2010 to manage the loan books of NRAM and Bradford and Bingley, will be selling approximately 39,000 residential mortgages and 27,000 unsecured loans worth £4.9 billion to investment bank Citi, following a competitive auction.
Treasury reassurance for borrowers
The Treasury has confirmed that it has agreed a ‘non-negotiable package of consumer protections’ to ensure customers terms and conditions remain exactly the same. NRAM borrowers have been advised that there is no need to take action and that mortgage and loan repayments should be made as usual.
“A key element in selecting the successful bidder was the treatment of customers. All bidders were required to agree to a non-negotiable package of customer protections before their bid was considered” said Chancellor of the Exchequer Philip Hammond.
New mortgage deals will not be available
Citi has confirmed that new mortgage deals will not be offered to customers, although borrowers that want to remortgage to another lender will face no financial penalties or early repayment charges if they choose to change lender at this time.
However, customers could be affected by future changes in the standard variable rate, which might leave some stuck paying higher rates if they cannot pass the affordability checks and switch lenders. However, the Treasury has said that any new SVR must be linked to the SVRs of regulated active lenders (e.g. high street banks and building societies), affording some protection from excessive rate increases in the future.
Chancellor Philip Hammond said: “Today’s sale enables us to recover the full amount taxpayers loaned to Northern Rock and Bradford & Bingley, helping us pay down our debts and strengthen our finances for the future.”
