Mortgages Uncovered

After 48 hours of uncertainty, Nationwide took over the largest building society in Scotland after the mutual went up for sale following losses of £26 million.

The Nationwide has announced that the 140 year old Scottish brand was to keep its name but that it was likely that there would be redundancies from support operations and the back office.

It is reported that the Bank of England did use some of its’ new powers which were under the Banking Act to speed through the takeover in order to prevent the Dunfermline from going bust.

Nationwide bought the Dunfermline’s wholesale and retail deposits, head office, branches and most of its residential mortgage book.

During the Today program the head of the previously owned Dunfermline Mr Faulds said;

“What we needed was not capital but access to the liquidity scheme and the Financial Services Authority raised the bar for access to the liquidity scheme. We were not asking for money to be given to us. We were asking for a loan, which would have been repaid with interest. We could have serviced a loan of between £20-£30m. That’s what we think we needed. It would have been secured against a good property book and a social housing book that’s rock solid.”

The Bank of England said: “It is business as usual for all customers. Dunfermline’s deposit business will continue to operate normally. Savers can be assured that their money is safe. All of Dunfermline’s staff has been transferred to Nationwide.”

Politicians in the UK repeatedly opine:

“If only consumers were better informed.” Consumers echo the sentiment: “If only I had understood what I signed up for. Experts say: “The implicit premise is that financial illiteracy caused the financial crisis, and financial education is the solution.”

It would seem that better educating the younger generation with regard to personal finance and mortgage information is a better way to ensure that there are fewer problems in the future. There is, it is felt by many, an opening to introduce a financial education course to be taught.

There are at least 28 states in America that at require for there to be some financial education to be taught, and it is hoped that other Sates will follow.

Wendy van den Hende, Chief executive of Personal Finance Education Group said:

“It’s clear from the difficulties that so many people are experiencing that we can’t rely on families to teach children how to manage money, as many of them do not know how to do it themselves. This is not to blame individuals who are victims of the global recession, finding themselves unemployed or in negative equity. Nor does it excuse the irresponsible lending from some of the financial institutions. We are failing our young people if we do not invest in their future. When they leave school they will have to make complex decisions that will have long-term consequences. “