Mortgages 

Government sells off £13bn of Northern Rock mortgages

Government sells off £13bn of Northern Rock mortgages

The chancellor has authorised a £13bn sale of Northern Rock mortgages acquired by the government during the financial crisis.

The mortgages are being sold by UK Asset Resolution to Cerberus, in what is the largest ever financial asset sale by a government in Europe.

UKAR is selling this portfolio of mortgages for £280m more than their book value, meaning taxpayers will get back more money from Northern Rock than they were forced to put in during the financial crisis.

Today’s (13 November) sale means the government has exited over 85 per cent of the assets of the former bank.

All proceeds will be used to pay down the national debt, with chancellor George Osborne saying the sale demonstrates the confidence investors have in the UK.

At the Summer Budget, the government set out that planned sales for 2015 to 2916 would deliver the biggest ever sale of publicly-owned corporate and financial assets in a financial year, exceeding £30bn in real terms for the first time.

Following today’s announcement, sales to date since 1 April total more than £24bn, which is already higher in real terms than the previous record year in 1987.

The Treasury also made a statement regarding the Northern Rock Asset Management Euro Medium Term Notes, which are not part of the mortgage sale.

Equivalent guarantee arrangements will apply in respect of NRAM (No.1) Limited as principal debtor under the terms of those notes.

The guarantee arrangements will be on the same terms as the arrangements announced on 8 December 2009 in respect of NRAM plc.

peter.walker@ft.com