by Mark Johnston
The Yorkshire and Clydesdale Banks have announced that they on well on track to hit the £10 billion mark for new lending to both businesses and mortgage customers. The announcement was made by their parent company National Australia Bank following its accusation back in 1990.
A spokesperson from National Australia Bank (NAB) commented on the success by saying: “The business is on track to deliver its two-year pledge to advance £10bn of gross new lending to businesses and mortgage customers by October 2011.”
Although the news is positive the message was still clear, the UK economy remains weak and the recovery could be much slower than expected due to the speed and extend of the planned cuts as a result of the coalition governments spending review. The mortgage market as a whole continues to deliver poor results as tighter lending criteria and cautious first time buyers as well as home movers put pressure on a unstable market.
UK chief executive, Lynne Peacock said: “Against a background of continued economic uncertainty, our UK business continues to demonstrate its resilience and our prudent strategic direction is unchanged. Clydesdale and Yorkshire Banks remain fully committed to supporting new and existing business and personal customers. We are firmly on course to deliver our two-year pledge to advance £10 billion of gross new lending to businesses and mortgage customers by October this year.”
This is very positive news for the Yorkshire and Clydesdale Banks following last years blunder when it was revealed that thousands of its customers had been paying incorrect mortgage repayments.
Around 18,000 customers of the two banks who held variable and tracker rate mortgages were affected by the error. The error was a result of the two banks calculating capital payments incorrectly. The miscalculation resulted in both banks collecting less than the minimum monthly payment. This was made worse by the record low interest rates. These underpayments have led to many of its customers having shortfalls on their mortgages which means they will not pay off their mortgages within the agreed term.
Since the news hit the headlines back in July, the bank has been fighting a losing battle against claims lodged by their customers. The financial ombudsman service which looks after complaints and financial claims within the financial services industry is pushing the bank the cover the missing payments. The bill is estimated to be up to £19 million.
When the error was first uncovered both the Clydesdale and Yorkshire bank asked their customers to make up the missing payments. Although they admitted the mistake was caused by their own miscalculation, they took the view that it was their customers responsibility to pay back any shortfall.
Although some customers have paid back the money, others have referred their case onto the Financial Ombudsman Service for review. As many expected, the Ombudsman agreed with the customers as they usually rule that mortgage lenders are responsible for any such mistakes.
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