Incentivising Northern Rock managers to run down its mortgage book at maximum speed never made sense in a wider financial and economic context – as argued here.

According to the Sunday Times, the government is now seeking Brussels clearance to delay further repayment of the Treasury loan, implying Rock will offer more attractive refinancing terms to its borrowers in order to keep their business. The new approach would presumably extend to the Bradford and Bingley mortgage book.

The article also suggests that the final Crosby report next week will propose a government guarantee scheme for mortgage-backed securities. This could further loosen mortgage supply – but only if the fees are set at a significantly lower level than for the existing credit guarantee scheme.

Let’s see if these reports are confirmed.