Northern Rock ‘will boost mortgage market’

The UK mortgage market will see a significant boost to its supply as a result of the return of Northern Rock, an expert has predicted.

Ray Boulger, the senior technical manager at brokerage John Charcol, remarked that the bank is looking to “significantly more aggressive pricing” to increase lending and this has in turn “forced other lenders to have appetites to lend”.

He added that the bank has a target of lending £4 billion this year – which he said it is unlikely to meet – with this rising to £9 billion next year.

This will be a “significant” amount in the context of a present market in which the total net lending is currently around £8 billion, he remarked.

Northern Rock was split into two parts from the government last month, after receiving permission to do this from the European Union.

This has seen it divided into a ‘bad’ bank holding all the toxic assets, while the ‘good’ part will operate as a normal lender to consumers and firms.

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