Vultures on the Rock peck at borrowers

Had you done so, you'd probably have found it so one-sided that you'd have quite lost the will to buy your first home. Once the come-on of discounted or fixed rates has expired, the standard mortgage agreement allows the lenders to charge whatever they like.

The wording is a hangover from the days when mortgages came from building societies who ran a cartel to fix the rate between them. If these inequitable arrangements weren't so universal, no bank would have been allowed to invent them.

The precise wording is suddenly of keen interest to the millions whose homes are mortgaged to Northern Rock, the bank which is in danger of becoming the consumer lending arm of the Bank of England.

The BoE lacks the will and the expertise to run these books of loans and is already talking to potential purchasers, many of whom look like large feathered things with scrawny necks, sharp talons and hooked beaks.

They will look at the paperwork and wonder what to bid; on the one hand, there's the risk that the borrowers may not be quite as prime as the Rock has always claimed but on the other, there's the possibility of charging the borrowers more for their money.

In normal times, a mortgage bank dare not let its standard rate get too far out of line with the market, because it discourages new borrowers. The lender has a brand to protect.

For Northern's borrowers, these are not normal times. Most of them are on some special deal or other and when that expires, they can choose one of the deals on offer to new borrowers. Only if they do nothing do they end up on the standard variable rate, which is currently 7.84%.

The buyers of bundles of Northern Rock's mortgages are unlikely to have any interest in building a brand, or in lending more. They are more likely to scrap the special deals so all the borrowers eventually end up paying the standard rate. If this looks like picking the borrowers clean, then that's only a vulture doing what vultures do.

If the customer remortgages elsewhere, the buyer gets his money back faster and can probably charge a penalty for early repayment. That's in the mortgage deed as well.

This promises to be a real headbanger for the Bank of England; if it holds on to the mortgages and lets them run off, it will be stuck in a business it knows nothing about for the next decade.

If it insists that any buyer of the books treats the customers fairly, it may have to sell them at a discount, further eroding the failed bank's dwindling reserves, and risking the taxpayer's money.

A Rock and a hard place, indeed.