Northern Rock offers 90 per cent mortgages.

Northern Rock, the first of the stricken lenders to be bailed out by the taxpayer, is going back into the lending market with a vengeance – on the instructions of its new boss, the government. It’s been given £14 bn to get lending again.

It’s a total turn round from the position a few weeks ago. Northern Rock – which at the height of the boom was one of the most aggressive lenders offering big mortgages with minimum deposits – began turning away their existing mortgagees who were searching for better deals. It told them to take their business to some other company.

The new move is designed to help provide a touch more confidence to the lending market. But it is still a drop in the ocean. The range and rates of mortgages on offer has dwindled massively from that which was offered in the past.

The most striking aspect of Northern Rock’s move is that it will be offering loans of up to 90 per cent. Lately it’s become almost impossible to borrow more than 75 per cent.

With the emphasis on lending rather than trying to pay back the government in double-quick time and taking money out of the market Northern Rock is also expected to slow down its repossession rate which had become an embarrassment for the government.

It is hoped that other lenders will follow Northern Rock’s lead and will start offering 90 per cent mortgages. There is a belief in Whitehall that Northern Rock’s move will trigger competition in the lending market which until recently was gripped by torpor.

Finding a 10 per cent deposit – rather than twenty five percent – should make acquiring a property easier for many homeseekers.

But property has gone through a price boom – and even though prices have begun to fall – ten per cent of a big asking price is still beyond the means of many home finders.

Prime Minister Brown has implored lenders to be responsible about whom they lend to. He has said that 100 per cent mortgages should no longer be offered. At the height of the boom mortgages of 125 per cent had become common place.