(1888PressRelease)
September 21, 2007 - The bank got into liquidity problems as the world's financial difficulties took hold in the UK.
It meant that Northern Rock went to the Bank of England for an emergency loan and this caused panic among savers and mortgage borrowers, many of whom quickly withdrew their money.
The Chancellor of the Exchequer Alistair Darling calmed things by announcing that the Bank of England would guarantee all deposits but his actions have been slammed by some analysts.
Financial Difficulty | Sell and Rent Back your home
"The events surrounding Northern Rock should be served as a warning to other lenders. Instead the Chancellor is floundering at his first opportunity to signal the end of the era of easy money as he promised. Is this his way of calling on banks to think about returning to good old-fashioned banking?" said Jenny Challenor, mortgage strategist at Torquil Clark.
"Alistair Darling is opening the floodgates for bad behaviour. Lenders have got the green flag to do as they please and if it all backfires, the Bank of England will wade in to bail them out," she added.
A further crisis could spell bad news for anyone wishing to make a quick property sale due to a change of circumstances such as a divorce, bereavement or ill-health, as more borrowers will lose confidence in the mortgage market.
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