Moneyextra: Northern Rock to revive mortgage business

Commenting on the announcement that Northern Rock is to revive its mortgage business, Richard Mason, Managing Director at Moneyextra.com said: "Today's announcement that Northern Rock is to revive its mortgage business is a hollow PR stunt that is unlikely to help the people who need it most - first time buyers.

"Customers should not be fooled into thinking that the new Northern Rock will be anything like the old Northern Rock, who in its heyday offered mortgages well in excess of 100% of the property value and lending up to five times a borrowers' salary.

Northern Rock's downfall was as a result of careless lending in a market where property was over-valued, whereas the new Northern Rock is likely to be over-cautious in an attractive property market. Consequently, first time buyers, buy-to-let investors and anyone without a big deposit will still struggle to buy a property.

"Regardless of the Treasury's backing, sensible lending will ultimately prevail and Northern Rock will be forced to compete alongside every other lender.

"Our recent research on the UK property market revealed that over 5 million people are looking to buy their first property in the next six months, compared to the 675,000 homeowners who are looking to downsize. However, of the 1,498 mortgages currently available from prime lenders, almost 90% require a deposit of 20% or more.

"Whether the resurrection of Northern Rock will bring new hope to the millions of people looking to buy, only time will tell.

"Our advice remains, strike while the iron is hot. As prices continue to tumble, investment opportunities within the property market are conversely growing and there are bargains to be had which are unlikely to be around for long."