Northern Rock mortgages are sold to US equity firm

THE Chancellor was last night accused of jeopardising the future of 125,000 former Northern Rock customers after selling their mortgages to a little-known US investor.

George Osborne said taxpayers would make a profit from the rescue of the bank after selling £13billion of mortgages to New York-based private equity firm Cerberus. ‘We are now clear that taxpayers will get back more money from Northern Rock than they were forced to put in during the financial crisis,’ he said. The sale was engineered by UK Asset Resolution – the ‘bad bank’ set up in 2010 to run down risky loans made by Northern Rock and Bradford & Bingley before both lenders were nationalised.

The Government stressed that customers do not have to take action. As part of the sale, the terms and conditions of their mortgages cannot change for 12 months – unless the Bank of England increases interest rates.

But consumer campaigners voiced concern over the deal. James Daley, founder of consumer website Fairer Finance, said: ‘When books of assets are sold to private equity firms it does rings alarm bells. These guys are not charities and are out to make as much money as possible. Customers could see their interest rates rise and see service deteriorate. This deal calls the Chancellor’s integrity into question.’

The Government said the deal means it recoups another £5.5billion of the £29billion taxpayers pumped into Northern Rock to prop it up – leaving just over £8billion outstanding.

TSB said yesterday it had agreed to buy £3.3billion of the loans from Cerberus relating to 3 ,000 customers and said it had ‘no intention’ of changing the terms.