Wed 24 Oct 2018, 10:04 AM | Posted by editor
LETTER from Mark Langabeer, Newton Abbot CLP (personal capacity)
A recent BBC Panorama programme revealed the injustice meted out to those that have mortgages with the former bank, Northern Rock. Few can forget the queues outside the Bank, as people tried to withdraw their money, with rumours of imminent collapse. It was the first ‘run’ on a British Bank for over 150 years.
The bank was nationalised. However, those who had been given mortgages by Northern Rock were stuck on interest rates well above market rates. They are locked into paying around 5% at a time when current interest rates are on average a little over 1%. There were around 400,000 mortgage holders at the time the bank was taken over and many thought that the Government was coming to their aid. They soon discovered otherwise.
They changed the Bank’s name to UKAR and in order to shrink debt levels, embarked on an aggressive policy of debt collection and evicting those who could not make the payments. UKAR paid bonuses to staff based on the amount of debt collected. One lady became seriously ill and fell behind on her repayments and UKAR started eviction proceedings while she was lying in Hospital.
If this wasn’t bad enough, things were going to get a whole lot worse. George Osborne, when he was Tory Chancellor of the Exchequer, announced the privatisation UKAR/Northern Rock. It was the biggest sell-off in British History. An analyst pointed out that the investors, ie, bond-holders, were bailed out in full and more.
In 2016, around 270,000 mortgage holders were transferred to an equity company called Cerberus. Under the name of Landmark Mortgages these sharks were described as utterly ruthless by one contributor. The financial analyst, Dr Nicola Lux, pointed out that Cerberus borrow from bondholders at interest rates averaging 1.9%, then they receive around 4.3% from the mortgage holders.
One guy declared, “I thought the Government was there for the little guy. Instead, they bailed out the banks, made me homeless and sold my home to a vulture capitalist. They have sold me down the river”. Labour must take over the likes of Cerberus/Landmark mortgages. They could slash the interest rate by half and still have a surplus for investing in our public services
