Member Article

Home losses worsen at the Rock

Losses incurred by Northern Rock on repossessed homes soared nearly four-fold during 2008 as the economy deteriorated, figures showed.

The nationalised bank saw the steep increases in losses on mortgages that are held in its Granite securitisation vehicle, which represents around half of its total mortgage book.

Figures for December 2007 showed that Granite had lost £10.2 million from repossessed homes since it was first set up in 2001, but by December last year, the figure had grown to £45.9 million - a 350% increase.

The repossession situation at Northern Rock looks set to get worse this year with rising unemployment and the country in recession.

Around 6.3% of mortgages held by Granite are currently in arrears of at least a month, a three-fold rise from only 2.19% in December last year. Within this total 2.88% of borrowers are at least three months behind with their mortgage repayments, up from only 0.68% 12 months earlier.

Falling house prices meant rising numbers of homeowners found themselves in negative equity, while the depressed housing market and the problems caused by the credit crunch restricted the options for people who still had equity in their homes to sell their property and clear their debt.

This was posted in Bdaily's Members' News section by Ruth Mitchell .