Repossessions by nationalised lender Northern Rock soared 63% last year, figures revealed today.
The figures came as Northern Rock confirmed pre-tax losses of £1.36 billion for the year.
The firm held 3,620 repossessed homes at the end of 2008 compared with 2,215 a year earlier, the group’s annual report showed.
The lender’s repossessed stocks peaked at 4,201 at the end of September, before easing back slightly towards the end of the year.
The overall rise during 2008 is being put down to Northern Rock being left with riskier customers as the bank drove higher-quality borrowers elsewhere to pay off its huge Bank of England loans.
The state-owned bank stressed repossession is a last resort and has committed not to seize an owner-occupied homes for at least six months after mortgages fall into arrears (see our guide to arrears and repossessions if you’re struggling to pay your mortgage).
Plans to shrink the business saw its overall residential mortgage book fall 27% to £66.7 billion.
The number of people in arrears has jumped sharply.
A total of 17,264 of its borrowers are three months or more in arrears – nearly five times as many as a year earlier.
The bank’s infamous Together mortgage – which lent up to 125% of the value of a home before being pulled in February 2008 – now accounts for 29% of its mortgage book, up from 24% a year ago.
‘Together customers on average have a higher loan-to-value and, therefore, in current market conditions, can find it more challenging to move their mortgage to another lender,’ the bank admitted.
Northern Rock took £23.6 billion out of the mortgage market last year as customers moved elsewhere, paying off £18 billion of the £26.9 billion it owed the Bank of England in the process.
Savings deposits up
But the bank has pledged to slow the pace of its redemptions to try and ease the current mortgage drought and last week announced plans to offer up to £14 billion in new lending over the next two years.
The firm said it’s attracted an extra £9 billion in savings deposits, bringing retail balances to £19.6 billion as customers sought the security of a government-backed bank in wider financial turmoil.
Savings account for 21% of the firm’s funding balances although the plan is to increase this to 50% in the medium-term.
To get a better deal on your mortgage, check out our mortgage finder and see if you can save money by switching your lender.
And find out if Northern Rock appears on our savings accounts Best Buys.
© Press Association 2009
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