Repossessions 'to fall' at Rock

Mar 3 2009 by Andrew Hebden, The Journal

NORTHERN Rock is today expected to report losses of around £1.4bn for its first year as a nationalised bank.

The Newcastle lender will also confirm that the downturn in the economy has hit its mortgage customers hard with the number of householders getting into arrears having grown substantially.

But the number of properties in the Rock’s possession is expected to have fallen since the end of last year, reflecting the bank’s commitment to work with customers who get into difficulty. Around 170,000 Rock customers are thought to be in negative equity. The vast majority of these were part of its notorious “Together” loan book, which provided loans of up to 125% of a property’s value.

Northern Rock chief executive Gary Hoffman indicated last week that the bank would be announcing significant losses. It was confirmed at that time that the Government was changing its strategy for the Rock, making around £14bn available for new lending over the next two years.

It is thought around £3bn of Government funding will be pumped into the Rock as it embarks on its new strategy.

The statement is also expected to underline the success the bank has had in meeting the original targets set down for it by the Government. By the end of 2008, it had paid back some £18bn of its Bank of England loan, while its mortgage redemption programme was also successful.