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Reckless lending led Scotland’s largest mutual to the brink of collapse, with expected annual losses of more than £24 million forcing the Government was to step in.

The First Minister, Alex Salmond has today questioned why the Nationwide had received so much public money when as little as £60million would be enough to keep Dunfermline BS trading.

Alister Darling who said his children have savings accounts with the Dunfermline, claimed the Government was left with no other option but to sell the profitable parts off.

Under the new deal assembled deal, the accounts of 300,000 Dunfermline depositors and £1billion book of ‘good’ mortgages will transferred over to the Nationwide BS.

All savers will be protected, with Nationwide being paid £1.6billion to cover the difference between Dunfermline’s liabilities and assets.

The 140-year-old brand name of Scotland’s largest building society will remain, and all 530 staff and 34 branches will transferred. However there will likely be redundancies from the Dunfermline’s headquarters.

In a statement to the Commons, Mr Darling said the sale was agreed after the Financial Services Authority (FSA) had concluded the firm was effectively insolvent after a series of disastrous

Mortgage approvals in the UK rose more than expected  according to new figures from the Bank of England.

38,000 mortgages were appoved in Febuary 2009, up from 32,000 in January.

There was also the largest net repayment of consumer debt since records began in April 1993.

Consumers repaid £245m worth of credit more than they took out in February, having taken on an extra £165m of credit in January.

The mortgage figures suggest that low interest rates and falling house prices may be encouraging people back into the market and indeed that some green shoots maybe appearing.

“February’s household borrowing figures suggest that housing market activity may finally have turned a corner,” said Vicky Redwood at Capital Economics.

“However, approvals have a long way to go before they get to levels that are no longer consistent with falling house prices - in fact they need broadly to double.”

The Building Societies Association  showed that mutual societies had received their highest net deposit levels on record.

Building societies had £1,595m more deposited in them than was withdrawn in February.

“Despite the Bank Rate being so low people are still keen to save, probably in response to the uncertain economic outlook and reduced job security,” said Brian Morris, head of savings policy at the BSA.

Gross mortgage lending by building societies in February came in at £1,214m, compared with £3,861m in the same month of 2008.

In The Loop has just launched a 20-year fixed rate mortgage with Mortgage Intelligence, offering a  Fixed rate of 4.99% and a 75% LTV. 

The mortgage also provides a break every five years allowing the customer to redeem the mortgage without incurring an early redemption  penalty.

Brokers are to receive their full procuration fee every five years providing they revisit the product to assess that it still constitutes best advice for their customer in line with Treating Customer Fairly guidelines. They must also confirm that the client wants to remain on the product for another five years.

The redemption penalty reduces over the five years from 5% in year one to 1% in year five and is 0% for one month at every five year anniversary.

The arrangement fee is £999 and is added to the loan and the maximum LTV is 75%.

Sally Laker, managing director of Mortgage Intelligence, says:“This is a great new innovative product and should prove extremely attractive to our brokers. It protects the client from interest rate rises for 20 years fixed at 4.99%, but if the client needs to exit they can do so with no penalties at each five year anniversary.

“The broker also gets a full procuration fee every time he gives advice and so enjoys a regular income but in the knowledge that the client is looked after from a TCF point of view.

“This is a modern day product, longer term security against rate increases, flexibility for changing lifestyles, but also ensuring that the broker gets paid for regularly checking their client’s needs still match the original product.”

She adds: “At last a great news story where despite the current climate new lender ITL Mortgages, headed up by Linda Will, ticks all the boxes with this exciting new deal.

“ITL has demonstrated that it is innovative, willing to try something new, and has worked so hard with Mortgage Intelligence to actually model the product so that it works for all concerned. I have tried for two years to find a lender to offer this product and for a number of different reasons no one could, that was until ITL came along.”

Linda Will, sales and marketing director at ITL Mortgages says:“It’s great to be able to develop and launch this product exactly to Sally’s specifications, especially as so many of our competitors faced problems they were unable to overcome when asked to do so. We’re particularly pleased to deepen our relationship with MI who were, of course, one of our original launch partners.”

The number of mortgages extended to home buyers has increased slightly, climbing from a low of 17,900 in November 2008 to 28,179 in February 2009.

The latest figures from the British Bankers’ Association are the slight evidence that the UK housing market is showing some signs of life. Estate agents have reported that more people are coming in through their doors in recent weeks, as rock-bottom interest rates start to slowly trickle through to some lower mortgage deals.

The Royal Institution of Chartered Surveyors earlier this month said that while home sales dropped to the lowest since 1978, the number of would be buyers registering with estate agents during February rose to the highest level since August 2006.

Some Economists suggested the worst may be over. “There are a few, but nonetheless important, green shoots emerging that provide a glimmer of hope,” Amit Kara at the bank said. “We are not suggesting that the road from here is onward and upward, but rather that the intensity of the pain will gradually ease.”

David Dooks, a director at the BBA, said: “There are certainly more mortgages being lent out by the largest lenders. But I don’t think this is a sign of green shoots, more a symptom that we may be getting close to the bottom.”

Most believe that too much should not be read into the BBA data. Seema Shah, property expert at the think tank Capital Economics, said: “Mortgage approvals for new house purchase are still extraordinarily weak, being 31 per cent lower than a year earlier and some 65 per cent below the late 2006 peak.”

The BBA figures also show that savers continued to withdraw money from their savings accounts during February as  interest rates dropped to new lows.

After a net £2 billion being taken out in January, a further £100 million was withdrawn in February. Most are using their money to either pay off their debts or – in the case of people losing their jobs – fund everyday expenses.

Earlier this month  the Parental Assisted Mortgage Scheme (PAMS) was launched by Bath  Building Society. It is a new innovative mortgage product designed to help young people to buy their first property, with their parents acting as guarantors.

With many lenders asking for deposits of 25 % for new loans. Bath Building Society are using a parental guarantee, combined with a collateral charge over some of the equity from the parents home, they are leading the way by offering more choice  to first time buyers.

The mortgage can also be used for second time buyers, wishing to take their next step up the ladder. The mortgage will enable buyers to borrow up to 90 per cent of the purchase price of their home.

In many cases the buyers will also be able to rent out an additional room in the property to a lodger to help cover the mortgage repayments.

Malcolm Graham-Jones, Head of Lending at Bath Building Society, said, “Now that prices have dropped back in the property market, this is a good time for buyers to reach the first, or their next, step on the housing ladder.”

“Until now, the problem they have faced is a lack of mortgage funding, which means that lenders will only provide mortgages to those with the highest deposits.”

“Also, with lower interest rates in the market, and the value of properties well below their peak, we can envisage a number of people wanting to take advantage of this product.”

Bath Building Society have launched many new innovative products over the years  In 2006 they launched the pioneering Buy for Uni mortgage, which allows students to purchase a property with their parents acting as guarantors for the loan. Many of the principles successfully utilized in this product have been adapted to the Parental Assisted Mortgage Scheme.

The Council of Mortgage lenders today announced that gross mortgage lending in February was down by 60% on February  figures from last year.

Lending, at £9.9bn, was 15% lower than in January, and was the lowest figure for any month since February 2001.

The CML said mortgtage funding was drying up because too many savers were choosing to put their money in National Savings policies.

Mortgage rationing has led to house sales falling by more than half.

“Retail savings are now the predominant source of funding for mortgages,” said Michael Coogan, the CML’s director general.

“But banks and building societies have seen savings ebb away to National Savings & Investments, which has a negative impact on their ability to lend.

“Until funding improves, the capacity of lenders to lend will remain constrained,” he warned.

National Savings & Investments (NS&I) has already raised an extra £10bn in just the first nine months of the current financial year, far ahead of its original forecast of an extra £4bn for the whole of the year.

Of that, £6bn came in during the last three months of 2008 as the collapse of the Bradford & Bingley and Icelandic banks pushed savers into looking for a completely safe home for their money.

However, the cost for those savers has been lower interest rates on their accounts.

NS&I has brought down its savings rates in line with the fall in the Bank of England’s bank rate.

This week NS&I announced that the payout rate on Premium Bonds would be cut from 1.8% to 1%, with one of the two £1m jackpot prizes being cancelled.

New figures from the FSA  show mortgage lending fell by 48% in the year to 2008.

The information for the last 3 months of last year, shows that new lending peaked in Q3 2007 at £102 billion before declining to £45 billion in Q4 2008, leaving gross lending 26% lower in the quarter, and 48% lower than a year earlier.

The total value of outstanding loans is £1,200 billion, an increase of 3.5% compared to a year earlier. But quarterly growth continues to slow, with a Q4 2008 increase of just 0.25%.

o Loans to borrowers with an impaired credit history represented just under 1% of new lending in Q4 2008, compared to 3.2% a year earlier.

While the number of new arrears cases had remained constant at around 54,000 each quarter since early 2007, the latest two quarters have shown sharp increases. Q3 2008 saw an increase of 10% to 60,000 cases, while results for Q4 2008 show an increase of 13% to 68,000 cases.

With borrowers increasingly struggling to clear their arrears, the total number of loan accounts in arrears has been steadily increasing since early 2007. At the end of Q4 2008 there were 377,000 loan accounts in arrears, an increase of 36,000 or just over 10% since Q3 2008, and an increase of 31% on a year earlier. The proportion of the residential loan book that is in arrears, and hence not fully performing, rose to 3.37% at end Q4 2008, up 0.44% in the quarter and up 1.11% on a year earlier.

The numbers of new possessions has grown significantly since Q3 2007, but the number of new possessions in Q4 2008 at 13,028 was actually 436 fewer than the 13,464 recorded for Q3 2008. New possessions in Q4 2008 were nonetheless 60% higher than a year earlier. For 2008 as a whole, the number of new possessions reached 46,750 which is an increase of 68% on the 27,900 recorded for 2007

A leading US auction company is to launch  in the UK market at the end of March.  

Over 500 bank and lender repossessed homes in the UK will be sold at five separate auctions running from Tuesday March 31 to Sunday April 5.The US auction house REDC will be detailing the properties on US website Auctiontoday.co.uk.

REDC is making a major investment in this first round of UK auctions with a massive marketing campaign and hundreds of TV, press and outdoor advertisements.

Each auction will be a large-scale event at a major venue with full assistance on site for potential buyers.

Jeffrey Frieden, CEO and co-founder of REDC and AuctionToday.co.uk, says: “Unlike traditional auction houses, which have restricted their pool of potential buyers to groups of savvy investors, REDC’s model is built on exposing its auction properties to as many people and as many markets as possible.

“We believe that everyone should be entitled to a bargain not just a select group of professional property investors.”