Mortgages Uncovered

Just when we thought that whole issue of Northern Rock might quieten down for a little while, there it goes again! For anyone who watched the news yesterday, you will have seen the latest hoo-har.

It seems we taxpayers have lent a total of £25 billion to Northern Rock and in return for nationalisation, we all believed we had taken control of their entire assets, largely their mortgage base worth a currently estimated £100 billion. Now you would think that would give us a decent chance of getting our money back, arguably a chance of x4.

However, it now comes to light that 45% is still owned by a separate legal entity, an offshore company called Granite. That reduces our ownership from approximately £100 billion to just £55 billion, and thereby reducing our chances of getting our money back to around x2.2.

The government has released a press briefing explaining the nature of the financial relationship between Granite and Northern Rock, which extends back to around 1999, and that since the Bank of England became involved there have been no further financial transactions between the two companies. You can read the press statement online