Research carried out by the firm shows that newly originated mortgages can product yields of 6 per cent or more while 2007 vintage mortgages yield as little as 2.5 per cent.
In a white paper produced by the firm, it says it is more efficient for banks with mortgages in run-off to shrink the assets than to hold onto them until the end of their term.
The firm estimates that as much as 12 per cent of outstanding mortgages in the UK are now held as part of books in run-off.
Exact says that the taxpayer is bearing the brunt of these losses because of the UK Government’s stakes in the banks that manage most of the run-off assets.
The paper says that the run-off books cause a range of problems including having many loans to borrowers in negative equity and poor affordability which ties up institution’s capital. It says that these books represent significant risks to the institutions that hold them in many cases.
Head of business development Malcolm Larmouth says: “Everyone has had to dig deep in order to prop up the financial system. But keeping mortgages in run-off denies the taxpayer the chance of getting a return on their investment.
“If these organisations are split and sold off, the profitable parts of the businesses will go into the hands of the private sector while the inefficient and costly elements – such as these inefficient run-off mortgages – will remain under public ownership. The British taxpayer deserves better.”