Rock getting back into bigger loans

The nationalised bank is launching three fixed-rate products for borrowers with only a 10 per cent deposit.

The group said it decided to move back into the market to help hard-pressed first time buyers and people who did not have much equity in their property.

It is thought the decision is aimed at boosting profits through higher-margin lending, ahead of a sale of the business.

The group became infamous for advancing people up to 125 per cent of the value of their home through its Together mortgage before the credit crunch struck.

But it has restricted its lending to loan-to-value ratios of 85 per cent or less since it received Government support after running into problems in 2007.

The group’s capacity to lend was restricted since its nationalisation, as it had to hold a high level of liquid assets, but these requirements have now been loosened.

Northern Rock is offering a two-year fixed rate loan at 5.99 per cent, a three-year one at 6.49 per cent and a five-year one at 6.59 per cent. There are no product fees to pay on any of the loans.

The rates charged are higher than the best deals on the market. Vernon Building Society has rates of 4.99 per cent and 5.99 per cent on three and five-year deals respectively but both carry fees.

Northern Rock was nationalised in February 2008.