Northern Rock mortgage shake-up

The bank is axing two-thirds of its mortgage range in the first product shake-up since it applied to the Bank of England for emergency funding.

The group said it was "simplifying" and "streamlining" its mortgage offering, as well as responding to the current market conditions.

But industry observers warned the changes would not affect the amount of risk the bank was prepared to take in lending money - the apparent source of its current difficulties.

It is reducing the number of different mortgages available, but there appeared to be little change to its general risk profile, with the group still prepared to lend up to 125% of a property's value through a combination of secured and unsecured loans.

From Thursday, it will no longer offer a range of different rates for people with different loan to value (LTV) ratios, instead offering one rate for all loans of up to 95% of a property's value.

It is also pulling its one-and-a-half year fixed rate mortgages and removing the option for people to get cash back at the end of their deal to help cover costs.

Other changes include the removal of enhanced income multiples for people taking out mortgages fixed for five or more years, with the group instead offering people mortgages of between 2.8 times and 4.9 times their salary, depending on their credit rating and how much they earn, on all products.

It is also removing its three-year fixed rate and variable rate Together mortgages, which enable people to borrow up to 95% of their property's value with an unsecured loan of up to 30% of its value capped at £30,000.

But despite the changes, the group said rates on its fixed and variable rate mortgages remained unchanged on a like-for-like basis.