4,000 Northern Rock mortgage holders were repossessed in 2008.

Government-owned bank Northern Rock today (3 March) announced a £1.4 million loss and revealed that 17,000 of its mortgage customers are in arrears.

Northern Rock plc has issued its Annual Report and Accounts for the year ended 31 December 2008. It has fulfilled its agreed loan repayments to the government, having reduced the amount it owes from £18 billion to £8.9bn on a net basis, from the total borrowed in 2007 of £26.9bn.

However, it also revealed that Northern Rock repossessions have risen by a sizable 63% in terms of stock – increasing from 2,215 at the end of 2007, to 3,620 in 2008.

With one in ten repossessions attributable to Northern Rock customers – 4,000 looks to be an estimated actual number at the present time – 10% of the 40,000 UK total according to the Council of Mortgage Lenders.

Out of the 17,000 in arrears, 50% are ‘Together’ mortgage customers – the loan that previously offered 100% borrowing.
New mortgage lending at the bank was about £2.9bn in 2008, compared with £29.5bn in 2007.

The company is confident in its “solid progress”, however, and is keen to uphold its promises both to the government and the UK public.

Chief Executive Gary Hoffman said: “Northern Rock has made good progress against the Business Plan objectives laid out in March 2008. The Government loan has been reduced significantly, and the deposit base of the Company has grown as customers have returned to Northern Rock.

“I’m confident that we enter 2009 in much better shape than at the beginning of 2008 – we’ve laid down the foundations to re-enter the private sector.”

Northern Rock plans to slow the rate of mortgage redemptions and will offer up to £14bn of new mortgage lending over the next two years through a range of mortgage products covering home purchase, including first-time buyers, and remortgaging. This will be responsible lending, which will be competitively priced to deliver a commercial return.

It stressed that it is not returning to offering 100% LTV (loan-to-value) mortgages – 90% will be the maximum level offered, and on a prudent basis to credit-worthy customers.