Outlook: Northern Rock
Thursday 28 January 1999
However, the Rock figured without the major league players in the mortgage market also turning mean, not to mention Standard Life popping up with its own mortgage division. So while margins duly contracted, so did the Rock's share of the market. In the second half of the year, net lending shrank by more than a half, while the bank's share of net new lending fell from 11 per cent to 7 per cent.
In order to make up ground on those big ugly competitors such as Prudential, Mr Finn is launching a mortgage that permits housebuyers to borrow more than the value of their homes. Mr Finn calls it the Together mortgage. Most others would call it an unsecured loan. It was activity of this sort that helped create the unsustainable credit bubble of the late 1980s and then left homeowners and mortgage lenders picking their way through the rubble when the property market predictably crashed.
Never mind. Memories are short and Mr Finn has a new interest group - namely his shareholders - to keep sweet by proving that he is growing the business. The Rock certainly needs to do that. Its proportion of first- time buyers is well below the market average, forcing it to rely on the less profitable remortgage market.
Every customer Mr Finn signs up at rock-bottom rates is at least forced to buy some other product like compulsory insurance, so rising fee income is making up for shrinking interest margins.
But overall the Rock looks to have embarked on a high-risk strategy at a time when the housing market is flat in its north-east heartland and the Prudential has lain an Egg that, by the Rock's own admission, is making parts of the savings market uneconomic.
The Rock's shareholders did not like what they saw yesterday. Those who are still building society members and who are tempted to become shareholders should take note.
- 1 Germanwings crash: Police make 'significant discovery' at home of co-pilot Andreas Lubitz
- 3 Zayn Malik already working on solo material, just days after quitting One Direction
- 4 The West has it totally wrong on Lee Kuan Yew
- 5 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Zayn Malik gives first interview since quitting One Direction: 'I've never felt more in control of my life'
Germanwings crash: Police make 'significant discovery' at home of co-pilot Andreas Lubitz
Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
Saudi Arabia says it won't rule out building nuclear weapons
#FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Germanwings plane crash live: Andreas Guenter Lubitz intentionally crashed flight 9525 into the Alps in act of mass murder and suicide – latest
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...