Is Alliance and Leicester safe?

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About 4% of all mortgage holders in the UK are Alliance and Leicester customers. Therefore, there might be a few of them who are understandably a little nervous at the news that Alliance and Leicester lost 33% of its value recently. Traders were literally dumping Alliance and Leicester stock as they feared that it might follow Northern Rock into crisis.

The reason there have been so many fears is that Alliance and Leicester raises money for its home loan business on the financial markets, rather than from customer deposits, in much the same way as Northern Rock. Therefore, with the company share price hitting such low levels, mortgage customers and savers are bound to ask themselves whether they are safe with the bank.

Well judging from the response that the Bank of England has made to the Northern Rock crisis, there is good reason to believe that customers are safe. If you have a loan with Alliance and Leicester you may wish to think about locking yourself into a fixed rate for a while, as the bank’s variable rates may be forced up as the bank seeks to get some funds. However, if you have a fixed rate you should be safe and you will not have to pay more than what your fixed rate is set at.

If you have savings with Alliance and Leicester then you can be pretty confident that the government will step in to guarantee all savings in order to maintain confidence in the system.

 
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