Northern Rock continued offering 125 per cent mortgages for six months after bailout

Meanwhile the Treasury has been criticised for allowing Northern Rock to continue to lend £800 million in mortgages with a loan to value rate of up to 125 per cent for six months after it was bailed out with taxpayers’ money. A report by the National Audit Office said the Treasury was aware of ‘potential shortcomings’ in how to deal with failing banks from 2004 and ministers were slow to respond and were under-prepared for the crisis. Business secretary Peter Mandelson defended the government saying the alternative to continuing lending was to put the entire business into receivership.