Northern Rock problems 'not jeopardising mortgages'

The problems seen at Northern Rock over the past few weeks have been largely confined to savings accounts and are unlikely to see customers' mortgages jeopardised, it has been advised.

While the run on the bank now appears to be over, the share price continues to fall amid a lack of interest from potential buyers, but Bestinvest says that the mortgages themselves are not in danger.

What's more, the concept of the 100 per cent plus loan-to-value mortgage is also one built on a firm financial basis, because while house prices may drop in the short term, they are ultimately forecast to continue rising over a longer time period, the company added.

"[Northern Rock] have been the pioneers of the 100 per cent plus mortgage for a long-time…and no one's saying that anyone with those sorts of mortgages is going to suffer any sort of penalty," noted Peter O'Donovan, Bestinvest mortgage manager.

"All the mortgages themselves were safe, they've got a good book.

"The fact is, eventually house prices will continue to increase," Mr O'Donovan added, before cautioning that a borrower's individual case was still very much a factor.

© Adfero Ltd