Northern Rock and the Government have pledged £14bn for mortgage lending and a return to 90% loan-to-value mortgages for new and existing clients.

In a press conference, Northern Rock’s chief executive, Gary Hoffman, played down the bank’s involvement in higher LTV lending. He said: “Affordability is the key issue. We might do some business at 90%, but we will test this market very carefully. It is likely that we will end up with more low LTVs as we go forward in the weeks and months.”

The bank also quashed any hope for the borrowers stuck on Northern Rock’s 4.79% standard variable rate (SVR); many of whom Hoffman admitted would be in negative equity by now. He said the door is definitely closed on 95-100% lending for existing clients, and the bank will not be looking to do any more than change the rate on a limited amount of those high LTV loans.

Hoffman said: “Our focus is on purchases. There is more work to be done in the area of our existing customers. We need to make sure we lend safely.”

Lee Bramzell, chief executive of PropertyIndex.com, added: “News that Northern Rock is going to massively increase new mortgage lending by £14bn in 2009 is excellent news for estate agents. By dividing £14bn by the average new mortgage value of £111,000, it is clear that this funding could finance the sales of over 126,000 properties in the UK. This translates into approximately 14 additional sales per year, per agent, which would go a long way towards securing the future of the industry.”