Losses Of Over GBP500 Million Reported
In the first half of this year Northern Rock has seen losses of GBP585 million, with a large amount of these losses caused by mortgage defaulters.
According to figures provided by Northern rock themselves they have seen an increase of about 300 percent on both missed mortgage repayments and the number of people in arrears. This reflects on the mortgage business Northern Rock was getting in the past, offering money to people who were at the edge of their comfort zone on the repayments at the time. As the interest rate goes up so they find the simply cannot afford the repayments and end up in arrears.
The worry for both Northern Rock, financed by the government, and the homeowners themselves, is that repossessions may follow. House buyers over the last 2 years may well find themselves in a position of negative equity if they had a 95 to 100 percent mortgage and with prices continuing to fall will find themselves unable to sell to cover their costs.