Nice Loans.co.uk > News > Movement in Loans Shares 20/11/2007

Loans company's mixed fortunes

The fortunes of various loans companies saw mixed fortunes this morning as the UK stock market reacted to some unusual trading situations with no-one able to predict what might happen.

It all started yesterday when shares in the loans and mortgage business Northern Rock lost around a quarter of their value, dropping very close to the £1 pound level.

But that was not the end of matters. City Bankers must have been burning the midnight oil as they discussed the Northern Rock situation and when they returned to their desks this morning the shares took another beating and lost almost 40% more dropping to £0.60 at one point.

That move seemed to drag down other companies involved in the loans marketplace including the sub-prime mortgage and loans provider Paragon Group who fell almost 50% and high street bank Barclays who dropped a more modest 4%.

Then events changed dramatically. Northern Rock shares regained around 90% of the losses, but Barclays rebounded 4% higher than the day's starting figure. Sadly things are not quite so rosy for Paragon. Their business depends on them finding loans themselves in order to provide the cash to lend to their customers and it is this aspect of their business which is failing. They are unable to find the commercial loans, mainly due to the poor credit profile of their typical customer. Without that money at their disposal, they can't write new loans and they don't make any money.

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