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Northern Rock has had to go cap in hand to the Bank of England on Thursday to loan enough money to meet its lending commitments.

With the credit crunch biting deeper, banks are becoming reluctant to loan to each other, and as Northern Rock specialises in mortgages and loans, rather than traditional banking, it is more exposed than many lenders to the credit squeeze.

Banks just don’t want to risk loaning money to Northern Rock so the only place it could go to raise funds is the Bank of England.

No one is saying that Northern Rock will collapse, taking mortgages and saving with it, but it does appear to be suffering more than other banks during this credit crisis. Even though it acted to regain stability by raising its interest rates on sub prime mortgages recently, borrowing emergency funds from the Bank of England will not enhance its reputation.

Northern Rock seems to be a victim of this credit crisis and we can expect it to become vulnerable to take over or merger activity. It’s share price tumbled on the stock exchange on Thursday as news of its recent troubles circulated through the City.

Meanwhile there is no respite for the home owner as mortgage woes seem to be getting worse. Mortgages PLC have joined a growing number of lenders in raising interest rates on their mortgage products.