Most of this came from struggling mortgage borrowers unable to repay their loans. The number of its residential mortgage customers in arrears rose from 0.38% of mortgages in June 2007 to 1.18% but it is still below the Council of Mortgage Lenders average of 1.21%. Reposessions rose from 2,215 to 3,710 but Northern Rock says this is because it is repossessing properties more quickly when it becomes clear that customers can not make their payments.
However, the bank did manage to repay £9.4 billion of a loan from the Bank of England, reducing the amount owed to £17.5 billion. The government will inject £3 billion to help Northern Rock’s finances, which is expected to come through pausing repayments of the loan made to the bank, with about £3 billion of that converted into equity.
