(Basis Rate Swap)

From:         Northern Rock plc
              Northern Rock House
              Gosforth
              Newcastle Upon Tyne
              NE3 4PL

To:           Granite Mortgages 03-2 plc
              Fifth Floor
              100 Wood Street
              London
              EC2V 7EX

Attention:    Securitisation Team, Risk Operations

To:           The Bank of New York
              48th Floor
              One Canada Square
              London
              E14 5AL

Attention:    Global Structured Finance (Corporate Trust)

                                                              28 January, 2004

Dear Sirs,

Confirmation - Issuer Basis Rate Swap

The purpose of this letter is to confirm the terms and conditions of the swap
transaction entered into between us on the Trade Date specified below (the
"Swap Transaction"). This letter constitutes a "Confirmation" as referred to
in the 1992 ISDA Master Agreement (Multicurrency-Cross Border) entered into
between us and both of you on the date hereof as amended and supplemented from
time to time (the "Agreement").

The definitions and provisions contained in the 2000 ISDA Definitions as
published by the International Swaps & Derivatives Association, Inc. (the
"Definitions") are incorporated into this Confirmation. In the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
shall prevail. Any terms not otherwise defined herein or in the Definitions
shall have the meanings given to them in the Master Definitions Schedule as
amended and restated by (and appearing in Appendix 1 to) the Master
Definitions Schedule Fifth Amendment Deed executed by, among others, the Note
Trustee on 21 May, 2003 and the Issuer Master Definitions Schedule signed for
the purposes of identification by Sidley Austin Brown & Wood and Allen & Overy
on 21 May, 2003 (as the same have been and may be amended, varied or
supplemented from



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time to time with the consent of the parties hereto). The Issuer Master
Definitions Schedule specified above shall prevail to the extent that it
conflicts with the Master Definitions Schedule. The following expressions
shall have the following meanings:

The term "Transaction" as used herein shall, for the purposes of the
Definitions, have the same meaning as "Swap Transaction".

Aggregate Issuer Amount means, in respect of a Payment Date, the aggregate of
the Issuer Amounts calculated in respect of the Swap Determination Periods
which end in the Interest Period relating to such Payment Date.

Aggregate Swap Provider Amount means, in respect of a Payment Date, the
aggregate of the Swap Provider Amounts calculated in respect of the Swap
Determination Periods which end in the Interest Period relating to such
Payment Date.

Average Fixed Rate Mortgage Loan Balance means, in respect of a Swap
Determination Period, an amount equal to the sum of the aggregate of the
outstanding current balances of the Fixed Rate Mortgage Loans at the start of
business on the first day of such Swap Determination Period as notified to the
Calculation Agent by the Cash Manager in accordance with the Cash Management
Agreement.

Average Flexible Mortgage Loan Balance means, in respect of a Swap
Determination Period, an amount equal to the sum of the aggregate of the
outstanding current balances of the Flexible Mortgage Loans at the start of
business on the first day of such Swap Determination Period as notified to the
Calculation Agent by the Cash Manager in accordance with the provisions of the
Cash Management Agreement.

Average Mortgage Loan Balance means, in respect of a Swap Determination
Period, the sum of the Average Fixed Rate Mortgage Loan Balance, the Average
Variable Rate Mortgage Loan Balance and the Average Flexible Mortgage Loan
Balance.

Average Variable Rate Mortgage Loan Balance means, in respect of a Swap
Determination Period, an amount equal to the sum of the aggregate of the
outstanding current balances of the Variable Rate Mortgage Loans at the start
of business on the first day of such Swap Determination Period as notified to
the Calculation Agent by the Cash Manager in accordance with the provisions of
the Cash Management Agreement.

Blended Rate means, in respect of a Swap Determination Period, a rate of
interest equal to the sum of (i) the Weighted Average Fixed Rate for such Swap
Determination Period multiplied by the Fixed Rate Ratio for such Swap
Determination Period; (ii) the Variable Rate Swap SVR for such Swap
Determination Period multiplied by the Variable Rate Ratio for such Swap
Determination Period and (iii) the Flexible Swap Rate for such Swap
Determination Period multiplied by the Flexible Ratio for such Swap
Determination Period.

Blended Spread means, in respect of a Swap Determination Period, a percentage
equal to the sum of (i) the Fixed Rate Spread for such Swap Determination
Period multiplied by the Fixed Rate Ratio for such Swap Determination Period;
(ii) the Variable Rate Spread



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for such Swap Determination Period multiplied by the Variable Rate Ratio for
such Swap Determination Period and (iii) the Flexible Spread for such Swap
Determination Period multiplied by the Flexible Ratio for such Swap
Determination Period.

Current Issuer means Granite Mortgages 03-2 plc.

Exchange Rate means:  For the Series 1 Notes:  GBP1.00: USD 1.6077
                      For the Series 2 Notes:  GBP1.00:  EUR 1.3994

Fixed Rate Mortgage Loans means those Mortgage Loans within the Mortgage
Portfolio from time to time which are subject to fixed rates of interest set
by reference to a pre-determined interest rate or series of interest rates for
a fixed period or periods or are subject to a maximum rate of interest (and
charge interest at the lesser of a variable rate and such maximum rate) for a
fixed period or periods (and shall, for the avoidance of doubt, exclude
Variable Rate Mortgage Loans and Flexible Mortgage Loans save for Flexible
Mortgage Loans which are, at the relevant time, subject to such fixed rates of
interest or such maximum rates of interest arrangements and shall also exclude
any Fixed Rate Mortgage Loans which have become Re-Fixed Mortgage Loans since
the immediately preceding Payment Date).

Fixed Rate Ratio means, in respect of a Swap Determination Period, the Average
Fixed Rate Mortgage Loan Balance divided by the Average Mortgage Loan Balance.

Fixed Rate Spread means 0.00% per annum or such other percentage amount as
Party A may notify to Party B and the Note Trustee in writing from time to
time in accordance with paragraph 6 of this Confirmation.

Flexible Mortgage Loans means those Mortgage Loans within the Mortgage
Portfolio that typically incorporate features that give the borrower options
(which may be subject to certain conditions) to, among other things, make
further drawings on the mortgage loan account, and/or to overpay or underpay
interest and principal in a given month and/or to take a payment holiday (and
shall, for the avoidance of doubt, exclude: (i) Flexible Mortgage Loans which
are, at the relevant time, subject to fixed rates of interest set by reference
to a pre-determined interest rate or series of interest rates for a fixed
period or are subject to a maximum rate of interest (and charge interest at
the lesser of a variable rate and such maximum rate) for a fixed period or
periods (which shall, for such fixed period, constitute Fixed Mortgage Loans);
and (ii) Variable Rate Mortgage Loans).

Flexible Ratio means, in respect of a Swap Determination Period, the Average
Flexible Mortgage Loan Balance divided by the Average Mortgage Loan Balance.

Flexible Spread means 1.55% per annum or such other percentage amount as Party
A may notify to Party B and the Note Trustee in writing from time to time in
accordance with paragraph 6 of this Confirmation.

Flexible Swap Rate means, in respect of a Swap Determination Period, a rate of
interest equal to the Variable Rate Swap SVR for such Swap Determination
Period minus the weighted average of the discounts charged to borrowers of
Flexible Mortgage Loans as at



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the start of business on the first day of such Swap Determination Period (the
weighted average being calculated by reference to the then outstanding current
balances of such Flexible Mortgage Loans as at that date), as determined by
the Cash Manager in accordance with the provisions of the Cash Management
Agreement.

Funding means Granite Finance Funding Limited.

Interest Period means in relation to the Current Issuer Notes a period from
(and including) a Payment Date (or in respect of the first Interest Period,
the Closing Date) to (but excluding) the next following (or first) Payment
Date.

Issuer Amount means, in respect of a Swap Determination Period, an amount in
Sterling equal to the amount produced by applying the Blended Rate for the
Swap Determination Period to the Notional Amount, such amount to be calculated
by the Calculation Agent on the basis of the actual number of days in such
Swap Determination Period, divided by 365.

Monthly Calculation Date means the twentieth day of each calendar month or, if
such day is not a Business Day, the next succeeding Business Day.

Monthly Calculation Period means, in respect of any Swap Provider Amount
and/or any Issuer Amount, the period from (and including) the Closing Date to
(but excluding) the next following Monthly Calculation Date and thereafter
from (and including) one Monthly Calculation Date to (but excluding) the next
Monthly Calculation Date.

Mortgage Portfolio has the meaning given to such term in the Master
Definitions Schedule.

Notes means the Current Issuer Notes.

Notional Amount means in respect of any Swap Determination Period an amount in
Sterling equal to (a) the aggregate Principal Amount Outstanding of the Notes
(converted to GBP at the applicable Exchange Rate in the case of Notes
denominated in USD or in EUR) on the Payment Date occurring in the Swap
Determination Period (or, if none, on the Payment Date immediately preceding
such Swap Determination Period), or in respect of the Swap Determination
Periods ending in the first Interest Period, the aggregate Principal Amount
Outstanding of the Notes on the Closing Date (converted into GBP at the
applicable Exchange Rate in the case of Notes denominated in USD or EUR) minus
(b) the balance of the Principal Deficiency Ledger on such Payment Date as
determined after taking account of any changes made on such date to the
balance of the Principal Deficiency Ledger (converted to GDP at the applicable
Exchange Rate in the case of the Principal Deficiency Ledger entries in USD or
in EUR) minus (c) the aggregate outstanding principal balance on such Payment
Date of any Fixed Rate Mortgage Loans which have become Re-Fixed Mortgage
Loans since such Payment Date.

Payment Date means the twentieth day of January, April, July and October in
each year or, if such day is not a Business Day, the next succeeding Business
Day, beginning in July 2003.



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Principal Deficiency Ledger means the Issuer Principal Deficiency Ledger of
such name maintained for the Current Issuer by the Cash Manager pursuant to
the Current Issuer Cash Management Agreement.

Reference Lenders means Abbey National plc, Alliance & Leicester plc, Woolwich
plc, HBOS plc, Lloyds TSB Bank plc, National Westminster Bank Plc and Bradford
and Bingley plc (or their respective successors) and such additional or
replacement residential mortgage lenders as shall be determined by the
Calculation Agent and Reference Lender means any one of them.

Swap Determination Date means the first Business Day of any calendar month.

Swap Determination Period means the period from (and including) the Closing
Date to (but excluding) the first Swap Determination Date and thereafter from
(and including) one Swap Determination Date to (but excluding) the next Swap
Determination Date.

Swap Provider Amount means, in respect of a Swap Determination Period, an
amount in Sterling which is equal to the amount produced by applying a rate
equal to the Three Month LIBOR applicable to the Interest Period in which such
Swap Determination Period ends plus the Blended Spread for the Swap
Determination Period to the Notional Amount, such amount to be calculated by
the Calculation Agent on the basis of the actual number of days in the Monthly
Calculation Period in which such Swap Determination Period ends, divided by
365.

Three Month LIBOR means, in respect of an Interest Period, the London
Interbank Offered Rate for three-month Sterling deposits for such Interest
Period (as determined by the Agent Bank in accordance with Condition 4 of the
Current Issuer Notes and notified to the parties on the Payment Date on which
the relevant Interest Period began); provided however that for the first
Interest Period such rate shall be interpolated as set forth in Condition 4.

Variable Rate Mortgage Loans means those Mortgage Loans within the Mortgage
Portfolio from time to time which are subject to a rate of interest which at
any time may be varied in accordance with the relevant Mortgage Conditions
(and shall, for the avoidance of doubt, exclude Fixed Rate Mortgage Loans and
Flexible Mortgage Loans).

Variable Rate Ratio means, in respect of a Swap Determination Period, the
Average Variable Rate Mortgage Loan Balance divided by the Average Mortgage
Loan Balance.

Variable Rate Spread means 1.75% per annum or such other percentage amount as
Party A may notify to Party B and the Note Trustee in writing from time to
time in accordance with paragraph 6 of this Confirmation.

Variable Rate Swap SVR means, in respect of a Swap Determination Period, the
rate equal to the average of the standard variable rates or their equivalent
charged to existing borrowers on residential mortgage loans as published from
time to time as at the start of business on the first day of such Swap
Determination Period after excluding the highest and lowest rate, of the
Reference Lenders, as determined by the Cash Manager in good



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faith and notified to the Calculation Agent from time to time in accordance
with the Cash Management Agreement.

Weighted Average Fixed Rate means, in respect of a Swap Determination Period,
the rate equal to the weighted average of the fixed rates of interest charged
to borrowers of Fixed Rate Mortgage Loans as at the start of business on the
first day of such Swap Determination Period (the weighted average being
calculated by reference to the then outstanding current balances of such Fixed
Rate Mortgage Loans as at that date) as notified by the Cash Manager to the
Calculation Agent in accordance with the provisions of the Cash Management
Agreement.

1.   This Confirmation supplements, forms part of, and is subject to, the
     Agreement. All provisions contained in the Agreement govern this
     Confirmation except as expressly modified below.

2.   The terms of the Transaction to which this Confirmation relates are as
     follows:

     Party A:                  Northern Rock plc

     Party B:                  Granite Mortgages 03-2 plc

     Trade Date:               14 May, 2003

     Effective Date:           21 May, 2003

     Termination Date:         The earlier of (i) the Payment Date falling in
                               July 2043, and (ii) the date on which the
                               outstanding principal balance of the Notes is
                               reduced to zero.

     Business Day centers
     for all Payments:         London

     Calculation of
     Amounts:                  On the Swap Determination Date immediately
                               preceding each Payment Date, the Calculation
                               Agent shall calculate the Aggregate Swap
                               Provider Amount for such Payment Date and the
                               Aggregate Issuer Amount for such Payment Date,
                               and forthwith notify Party A, Party B, the Cash
                               Manager and the Current Issuer Cash Manager of
                               the amounts so determined and of the net amount
                               determined as set out below.

                               Notwithstanding any other provision of this
                               Confirmation, if on any date (i) additional
                               Mortgage Loans are added to the Mortgage
                               Portfolio or (ii) Funding draws down a new
                               intercompany loan (any such date, a "New Loan
                               Date"), then the Calculation Agent may make any
                               adjustments it deems appropriate to the Average
                               Fixed Rate Mortgage



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                               Loan Balance, the Average Flexible Mortgage
                               Loan Balance, the Average Variable Rate
                               Mortgage Loan Balance and the Weighted Average
                               Fixed Rate for the Swap Determination Period in
                               which such New Loan Date occurs in order to
                               reflect the addition of such Mortgage Loans.

     Payments:                 If in relation to any Payment Date:

                               (i)    the Aggregate Swap Provider Amount for
                                      such Payment Date exceeds the Aggregate
                                      Issuer Amount for such Payment Date,
                                      Party A shall pay the amount of such
                                      excess to Party B on such Payment Date;

                               (ii)   the Aggregate Issuer Amount for such
                                      Payment Date exceeds the Aggregate Swap
                                      Provider Amount for such Payment Date,
                                      Party B shall pay the amount of such
                                      excess to Party A on such Payment Date;

                               (iii)  the Aggregate Swap Provider Amount for
                                      such Payment Date is equal to the
                                      Aggregate Issuer Amount for such Payment
                                      Date, no amount shall be due and payable
                                      by either party hereunder in relation to
                                      such Payment Date.

     Calculation Agent:        Northern Rock plc acting in its capacity of
                               Administrator pursuant to the Administration
                               Agreement or of Cash Manager pursuant to the
                               Cash Management Agreement, as the case may be.

3.   In relation to Part 5(f) of the Agreement, in the case of a redemption in
     full of the Notes pursuant to Condition 5(F) of the terms and conditions
     of the Notes, "Market Quotation" in respect of the Terminated
     Transactions shall be determined based on the anticipated rate of
     reduction in the Notional Amount had such redemption not occurred.

4.   Account Details:

     Payments to Party A:      Bank:             Northern Rock plc
                               Account Name:     Northern Rock Group
                                                 Treasury
                               Sort Code:        30-00-59
                               Reference:        Granite Mortgages 03-2 plc

     Payments to Party B:      Bank:             Citibank N.A.
                               Account Name:     Granite Mortgages 03-2 plc



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                               Account Number:   10135518
                               Sort Code:        18-50-08
                               Reference:        Northern Rock plc

5.   Notice Details:

     Party A:                  Northern Rock plc

     Address:                  Northern Rock House
                               Gosforth
                               Newcastle upon Tyne
                               NE3 4PL

     Facsimile Number:         0191-279-4694

     Attention:                Treasury Settlements Manager

     Party B:                  Granite Mortgages 03-2 plc

     Address:                  Fifth Floor
                               100 Wood Street
                               London
                               EC2V 7EX

     With a copy to:           Northern Rock plc
                               Northern Rock House
                               Gosforth
                               Newcastle upon Tyne
                               NE3 4PL

     Facsimile Number:         0191-279-4694

     Attention:                Keith M. Currie

     With a copy to the
     Note Trustee:             The Bank of New York

     Address:                  One Canada Square
                               48th Floor
                               London
                               E14 5AL

     Facsimile Number:         0207 964 6262

     Attention:                Global Structured Finance
                               (Corporate Trust)



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<PAGE>

6.   Notwithstanding any other provision of this Confirmation, if on any date
     Funding draws down a new intercompany loan, then to reflect prevailing
     market conditions, provided the Rating Agencies have confirmed the then
     current ratings by the Rating Agencies of the existing Notes of any
     Issuer, Party A may, by notice in writing to Party B and to the Note
     Trustee on such date, make any adjustments it deems appropriate to the
     Fixed Rate Spread, the Floating Rate Spread and the Variable Rate Spread
     (or any of them) for the Swap Determination Period in which such date
     occurs and for all Swap Determination Periods occurring after such date.



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Yours faithfully,

NORTHERN ROCK PLC

by:






Name:

Title:



Confirmed as of the date first written:

GRANITE MORTGAGES 03-2 PLC

By:






Name:

Title:




THE BANK OF NEW YORK
  as Note Trustee

By:






Name:

Title:



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