It is thought some 100,000 Northern Rock customers will not see a reduction in their standard variable rate following the Bank of England’s 0.25% cut to interest rates, after a slab of Northern Rock’s loan book was sold by the government’s holding company, UK Asset Resolution, to Cerberus in November.
The board of directors at Landmark, which oversees the portfolio sold to affiliates of Cerberus Capital Management last year, said the fact it was a wholesale funded entity and a non-deposit taking bank meant it did not directly benefit from the Bank of England’s rate cut.
Some ex-Northern Rock borrowers will benefit from the rate cut, however, with around 34,000 customers now part of an entity managed by TSB, called Whistletree.
Lord McFall, a founder of the New City Agenda think tank and former Treasury Committee chair, raised concerns that many Northern Rock customers could be classed as mortgage prisoners, and are unable to move to another lender and secure themselves a better deal.
In a statement, Landmark said: “Landmark continues to demonstrate a strong commitment to being an excellent corporate citizen and a good steward of the Northern Rock portfolio. It has ensured that its borrowers are receiving exemplary service and care in accordance with the highest industry standards.
“Unlike TSB and other similar institutions, Landmark is not a deposit taking bank and, as a wholesale funded entity, it does not directly receive the benefit of reduced funding costs flowing from the BoE’s rate cut. To the contrary, Landmark’s funding costs are exposed to increases in the wholesale funding market, and the impact of Brexit on the housing market in general, and the acquired portfolio in particular, must be considered,” it added.
“Landmark will continue to monitor the markets and carefully consider the balancing of the expectations of its investors and customers in the context of the heavily negotiated transaction with UKAR and the issues relating to the market dynamics impacting interest rates.”