Mortgage Prisoners

Since the collapse of Northern Rock, mortgage holders have been forced to pay interest rates significantly higher than the general market average. These rates have been unfairly imposed due to circumstances beyond their control.

Landmark Mortgages were the highest bidders for Northern Rock’s mortgage accounts following the bank’s collapse. However, Landmark Mortgages operated as a closed book lender, meaning they were never in a position to issue new mortgages on the open market. Given the excessively high interest rates they charged, it is unlikely they would have ever attracted new customers.

From the outset, Landmark Mortgages’ business model was fundamentally flawed. As customers repaid their loans, moved their mortgages to other lenders, or reached the end of their mortgage terms, the company’s revenue stream inevitably declined. This made the business unsustainable from the beginning.

Unlike traditional lenders, Landmark Mortgages is not a bank. Their interest rates were not directly tied to the Bank of England, meaning they were under no obligation to raise rates when the Bank of England increased them. Despite this, customers continued to face disproportionately high mortgage costs.

Landmark Mortgages had no ability to amend the terms of the mortgages under their control. In early 2025, they sold a portion of their mortgage book to Bloom Home Loans. However, in letters sent to customers, Bloom Home Loans confirmed they would continue charging the same high interest rates, offering no relief to affected borrowers.

Several aspects of the Government’s handling of the sale are under investigation, including whether due diligence was conducted and whether Landmark Mortgages’ business model was ever suitable for the mortgage holders affected.

Northern Rock’s Collapse and Subsequent Mortgage Ownership Transitions

2007: The Collapse of Northern Rock

• September 2007: Northern Rock, a prominent UK bank, faced a liquidity crisis due to its over-reliance on short-term funding amidst the global financial turmoil. This led to the first bank run in the UK in over a century, with customers queuing to withdraw their savings. ​

2008: Nationalisation

• February 2008: After unsuccessful attempts to find a private buyer, the UK government nationalised Northern Rock to prevent its collapse and stabilise the financial system. ​

2010: Restructuring and Creation of ‘Mortgage Prisoners’

• January 2010: Northern Rock was split into two entities:​

  • Northern Rock plc: Handled new retail deposits and mortgage lending.​

  • Northern Rock (Asset Management) plc (NRAM): Managed the existing mortgage book and closed-book assets.​

  This restructuring led to the emergence of ‘mortgage prisoners’—borrowers whose loans were held by NRAM and who found themselves unable to remortgage or switch to more favorable rates due to stricter lending criteria introduced post-crisis.​

2016: Sale to Landmark Mortgages

• May 2016: NRAM sold a £13 billion mortgage portfolio to Cerberus Capital Management, a U.S. private equity firm. The administration of these mortgages was transferred to Landmark Mortgages, a subsidiary of Cerberus. This transfer perpetuated the ‘mortgage prisoner’ situation, as many borrowers remained on high standard variable rates without the ability to switch lenders.​

2024: Acquisition by Nowhere Bloom

• September 2024: Bloom Home Loans, a financial services company, acquired a portion of the mortgage accounts previously managed by Landmark Mortgages. This acquisition aimed to restructure these loans and potentially offer more competitive rates to the affected borrowers.​

Investigation into the Impact on Borrowers

The series of ownership changes—from Northern Rock to NRAM, then to Landmark Mortgages, and finally to Bloom Home Loans—has had significant implications for borrowers:​

• Mortgage Prisoners: Many borrowers have been unable to refinance or switch to more favorable mortgage terms due to the stringent lending criteria and the entities managing their loans being inactive lenders.​

• Legal Challenges: Borrowers have initiated legal actions against lenders like TSB, alleging unfair interest rates. However, courts have ruled that these lenders did not breach contract terms, as the rates applied were consistent with those of the original agreements.

• Current Developments: The acquisition by Bloom Home Loans in 2024 has raised questions about potential changes in mortgage terms for the affected borrowers. While some hope for more favorable rates, the specifics of how Bloom Home Loans will manage these accounts remain to be seen.