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UKAR: More customers to struggle
The state-owned company that took on assets from bailed-out lenders Northern Rock and Bradford & Bingley (B&B) has warned it is braced for an increase in the number of customers struggling to cope with their mortgages.
UK Asset Resolution (UKAR), which has 655,000 customers, said the uncertain economic outlook, rising cost of living and falling house prices would lead to more customers experiencing difficulties and was planning to step up measures to help.
UKAR, which revealed a further £788 million repayment to the Government, bringing the total owed down to £45.8 billion, said around 10% of its customers were finding it difficult to meet mortgage repayments.
The Government split Northern Rock in two at the start of last year, forming Northern Rock plc, which was sold to Virgin Money, and Northern Rock Asset Management (NRAM) to house the more toxic loans. B&B merged with NRAM shortly after it was formed.
The total number of mortgage cases three or more months in arrears fell by 9% since the end of 2011 to 30,222. The total amount of arrears owed by residential customers fell by 8% or £18.8 million to £215.1 million in the period.
In the first half of 2012, UKAR made 34,000 mortgage arrangements and account changes to help customers with repayments. The number of repossessions fell by 15% to 3,871 in the period.
UKAR chief executive Richard Banks said: "Much of our focus is on helping those of our customers who are in financial difficulty and it is pleasing to see a further significant reduction in arrears levels despite the continued economic certainty and pressure on consumers' finances."
Northern Rock was nationalised in February 2008 after it collapsed amid the credit crisis, sparking the first run on a UK bank for 150 years. Bradford & Bingley was taken over by the Government later that year, while the group's savings business was sold to Spanish-owned Santander.
UKAR reported a 6% rise in underlying pre-tax profits at NRAM in the six months to June to £415.1 million, while Bradford & Bingley reported a 66% slide in profits to £66.3 million after an additional interest payment was made to the Government.
Within the Government loan repayments, B&B repaid a further £700 million, reducing its bill to £26.2 billion, while NRAM returned £88 million, leaving £19.6 billion.