J.P. Morgan priced the latest mortgage deal from U.K. bank Northern Rock at levels not seen for approaching two years and was still overwhelmed by demand from investors desperate for a mainstream mortgage deal, backed by good quality mortgages.

The deal - Northern Rock's second - was called Granite 00-1, totaled GBP750 million ($1.2 billion) and was split into a senior GBP694.8 million tranche, rated AAA/Aaa by Standard & Poor's and Moody's Investors Service; a GBP32.7 million AA/Aa3 piece; and a chunk worth GBP22.5 million rated BBB/Baa.

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