Northern Rock Cuts Back on Program Offerings

October 3, 2007 No Comments »

Struggling UK mortgage lender Northern Rock said today that it will scrap about two-thirds of its loan programs in an attempt to cut costs.

“The move towards more of a one-size-fits-all product structure, by simplifying and streamlining products, brings the Northern Rock range more in line with the rest of the market,” said Julia Harris, a Moneyfacts spokeswoman.

It’s the first change to their product line since the Bank of England bailout, rather shocking given the circumstances.

More surprisingly, though the ailing lender plans to dump some short-term fixed-rate mortgage programs and lower the loan-to-value on some programs to 95%, it plans to keep a 125% LTV mortgage product.

“With minimal change to pricing and the retention of the higher LTV products, this is certainly not a change which indicates that Northern Rock is changing its risk profile,” said Harris.

You’d think a lender in this position would eliminate any program with even a tinge of risk, but that doesn’t seem to be the case here.

Meanwhile, shares of Northern Rock leapt 12 percent after the Financial Times said JC Flowers & Co. had arranged funding for a possible takeover.

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