Northern Rock arrears and repossessions soar
Northern Rock has reported that its home repossessions rose by 63% last year to 3,620.
Arrears also soared with 17,264 borrowers three months or more behind with their repayments at the end of 2008, up from 3,492 at the close of 2007.
The rise takes the percentage of the bank’s total mortgage book in arrears to 2.92%, compared with an industry average of 1.88%.
Prior to its near collapse in 2007, Northern Rock offered high loan-to-value (LTV) mortgages which have left it particularly exposed in the recession and property market downturn.
Its reputation for irresponsible lending is synonymous with its development of the “Together” mortgage, which allowed borrowers up to 125% of the value of a property.
In recent months this high LTV loan been driving Northern Rock’s repossession rate.
In addition, the number of “Together” borrowers three months or more in arrears had increased to 4.5% at the end of 2008.
Last year, new mortgage lending by the bank shrank to around £2.9 billion, compared with £29.5 billion in 2007.
However, Northern Rock has recently announced its return to new lending and says it will be offering £14 billion in mortgages on responsible terms over the next two years. Around £5 billion will be made available this year and a further £9 billion in 2010.
Finally, the lender has also revealed that it posted a loss of £1.36 billion in 2008, compared with a loss of £585 million in 2007 and that it remained ahead of schedule in repaying its £26.9 billion loan from the Government and has only around £8.9 billion outstanding.
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