The “bad bank” which houses the remnants of Northern Rock and Bradford & Bingley’s mortgages, paid back another £1.6bn to the government in the six months to the end of September, taking the total repaid in its four years of existence to £12bn.
The cash – generated as customers pay back their home loans – is used to repay the £48.7bn that was loaned to UK Asset Resolution, which was set up to look after the mortgages nationalised when Northern Rock and B&B ran into difficulty in 2008.
Richard Banks, UKAR’s chief executive, is aiming to repay the loan in the next 10 years but still expects the organisation to be responsible for £20bn of mortgages even after the money is repaid.
He is continuing his efforts to contact 22,000 customers whom UKAR has calculated could be pushed into arrears if interest rates were to rise above their historic low of 0.5%.
The number of mortgage customers three or more months in arrears has fallen, as has the number of former customers of Northern Rock who still have loans greater than the value of their homes after taking out one of the lender’s “Together” mortgages before the 2008 crisis. These loans allowed customers to borrow more than the value of their home.
Even with the rise in house prices since the crisis, more than 43,000 of its customers still have a loan larger than the value of their home. This represents some 9% of its customers, although this is down from 18% a year ago and from 35% in 2010.
The number of Northern Rock customers has fallen to 260,000 from 298,000 a year ago and the number of B&B customers is down from 193,000 to 175,000. UKAR owns the Northern Rock mortgages that were not bought by Virgin Money in 2011.
Since the end of its half-year, 27,000 customers’ mortgages have been sold to a consortium led by the US bank JP Morgan. UKAR is aiming to conduct more of these deals although two-thirds of the mortgages would not be suitable for sale as they are packaged in the Aire Valley and Granite securitisation vehicles used by the banks before the financial crisis.
The longest mortgage in UKAR’s portfolio runs to 2049.
