Northern Rock leading the way in repossessions
Nationalised Northern Rock recently came under scrutiny after claims that it was being ‘aggressive’ in its repossessions policy.
The lender is expecting to be responsible for 10% of all repossessions this year as its 125% mortgages are driving its repossession rate.
The 125% mortgage from Northern Rock, known as ‘Together’ loans, represent around 30% of the lender’s mortgage book, they account for 50% of its arrears and around 75% of all repossessions.
Meanwhile, latest figures showed the proportion of Together mortgage customers in arrears for three months or more stood at 3.1%, whereas the industry average was 1.33%.
The 125% mortgage, which has long been subject to criticism, has now been withdrawn from all lenders, as the credit crunch has meant that lenders are tightening their lending criteria.
However, many have defended the 100%+ mortgage range as it has helped first-time buyers onto the property ladder during the housing market boom.
Bradford & Bingley, the buy-to-let specialist, also came under scrutiny and as a result, the two lenders faced a Treasury Committee banking inquiry hearing.
However, Gary Hoffman, Northern Rock’s newly appointed chief executive, denied the claim and warned that an increase in unemployment, alongside falling house prices would, undoubtedly, have an impact on customers repaying their mortgage.
Northern Rock said typically, a customer in difficulty has been in discussion with the lender for over a year before their home is repossessed.
Northern Rock is in the process of repaying its loan from the taxpayer after it was nationalised earlier this year.