In its Q1 2009 statement, the nationalised lender revealed its arrears rates have soared to 3.67 per cent, compared with 2.92 per cent at the end of 2008. According the Council of Mortgage Lenders, industry average arrears rate is currently 1.53 per cent.
It also revealed that its stock of unsold repossessed properties has continued to fall, from 3,620 at December 2008 to 3,200 at the end of March 2009. It attributes this to its debt management strategies, which include Northern Rock’s participation in the Government’s Homeowner Mortgage Support Scheme.
But it says its mortgage redemption rates slowed significantly in the first three months of 2009 and are running at around half the average rate of 2008. The bank says this reflects the steps taken last year to slow down the rate of redemptions. It says approximately nine out of ten customers moving to Northern Rock’s standard variable rate.
Northern Rock’s gross mortgage lending in the first three months of 2009 totalled £550m, which it says does not yet reflect the impact of planned increases in mortgage lending; Northern Rock has pledged £14bn of new lending over the next two years, with £5bn in 2009.
It says the quality of its new lending remains high, with the average loan to value of new lending in the first quarter at 48 per cent.
Northern Rock chief executive Gary Hoffman says: ”We are making good progress with the legal and capital restructuring of the business – which we expect to complete in the second half of the year. The economic environment remains difficult but our trading performance in the quarter was in line with our expectations.
“At Northern Rock we remain committed to working with all our customers and to assist those who may be under pressure financially, providing the best possible support we can in all circumstances.”