Northern Rock – the small bank with the big impact. Northern Rock is a relatively small British bank. Yet its spectacularly imprudent mortgage strategy caused the first run on a British bank in more than a century. Northern Rock's first mistake was its willingness to relax normal lending criteria. It granted mortgages at six times the applicant's income, and lent up to 125 per cent of the value of a property, despite already inflated property values. Secondly, it depended on borrowing money short-term in the interbank market and lending it long-term as mortgage finance. The bank's dependence on the wholesale market - around 70 per cent of its funding came from this source - was a catastrophe waiting to happen. It was a fundamentally irresponsible strategy, which presumed an unending rise in property prices, perhaps punctuated at worst by brief 'corrective' falls of up to 5%. But the UK property market was already grossly inflated, and the collapse of the sub prime mortgage market in the US led to a cascade of bad debts through the banking system. Interbank lending froze, making it virtually impossible for Northern Rock to raise fresh funds as its loans fell due. On 14 September 2007, the Bank sought and received a liquidity support facility from the Bank of England. 22 February 2008, the Treasury was forced to rescue and then nationalise the bank to protect the wider financial system. And that was just the start.