Northern Rock posts £1.3bn loss
Northern Rock posts £1.3bn loss
Tuesday 3rd March 2009
Nationalised bank Northern Rock has posted pre-tax losses for 2008 of £1,355.9 million - as it sees more borrowers fall behind on their mortgages.Losses have increased due to customers defaulting on loans – and the second half of the year saw an acceleration of this trend – with second half losses up 32 per cent on the first half.
Northern Rock reported "a significant increase in arrears across all loan portfolios" – and home repossessions have increased by 63 per cent last year.
But the firm maintains it repossesses a property on average every 15 months after a customer falls into arrears.
Residential arrears of over three months have increased to 2.92 per cent, compared with 1.87 per cent at the end of September 2008.
Arrears of over three months on Together secured loans – which offered borrowers up to 125 per cent mortgages - have increased to 4.53 per cent.
However, Northern Rock claims it is "well placed to move forward and support government policy to increase mortgage lending capacity in the market".
Last month, Alistair Darling announced Northern Rock would slow down in paying off its debt to the government and start increasing mortgage lending by £5 billion in 2009 and between £3 billion and £9 billion in 2010.
In 2008, Northern Rock mortgage lending stood at £2.9 billion, compared to £29.5 billion in 2007 – and the firm only offered a limited range of mortgages and focussed on attempting to encourage
Gary Hoffman, Northern Rock chief executive, said: “We can now return to what we do well – mortgage lending.
"Our return to the mortgage market will be governed by focussing on responsible lending, understanding our customers’ needs, and offering them great products and service.
"We have an exciting opportunity to help consumers in the mortgage and savings markets and to secure the long-term future of the company, while protecting the interests of the taxpayer."
He added Northern Rock's debt to the government has now been reduced significantly – cut from £26.9 billion at the end of 2007 to £8.9 billion - and the deposit base of the company has grown as customers have returned.
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