Northern Rock: Borrowers should not be concerned

Posted: 14 Sep 2007 11:07:49 GMT

Northern Rock mortgage borrowers have been reassured about the firm’s future after it turned to the Bank of England for a loan.

Northern Rock mortgage borrowers have been reassured about the firm’s future after it turned to the Bank of England for a loan.

With credit markets seizing up, the lender has been forced to ask the Bank for a loan but it does not mean that the firm is on the brink of going bust.

Bank of England governor Mervyn King has sent a letter to the Treasury Select Committee, detailing that he is not too concerned about the loan application and sees the problems as being temporary.

Commenting on the situation, Treasury Select Committee chairman John McFall said that borrowers have no reason at all to panic.

"I don't think they should be worried about their current accounts or mortgages," he said.

"The fact that the Bank is willing to act should be reassuring," added Mr McFall.

The problems have arisen as a result of banks becoming more wary about lending to each other in light of turbulence in the financial markets.

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