Northern Rock have made headlines for all the wrong reasons this month following the announcement they’d been given an overdraft by the Bank of England. Certainly unusual and despite reassurances their branches were soon besieged by savers wanting to withdraw their money to the tune of about 3 billion pounds.
The difficulties were as a result of the credit difficulties in the US mortgage market and banks made it more difficult to borrow between each other. That’s what lenders do. Borrow at one rate from one source then lend to us at another.
The question that remains now the dust has settled somewhat is: Were we right to be so alarmed?
Probably not in our opinion but hey if it’s your life savings, why take a chance? That’s what many of their customers were no doubt thinking.
The company has grown at an amazing rate in the past few years and they’re a huge player in the UK mortgage market. Our guess is that their difficulty was temporary.
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