Gross mortgage lending during the quarter accelerated to £1 billion as the company increased its lending towards its 2009 target. Mortgage lending for the nine month period to 30 September 2009 was £2.3 billion. The quality of new lending remains high, according to Northern Rock, with the average loan to value ratio of new lending at 55%.
Following completion of its proposed and much-publicised restructure, Northern Rock plc intends to further increase its gross mortgage lending in 2010 towards the previously announced £9 billion. All mortgage lending will continue to be responsible, with affordability for customers remaining a key consideration. All loans will be carefully underwritten, on commercial terms and in taxpayers’ best interests, demonstrating the application of the company’s strengthened risk management capabilities.
As anticipated, continued improvement in early arrears trends (arrears under three months) has started to flow through, resulting in a slowdown in the rate of increase in arrears over three months. The company’s residential arrears over three months have increased to 4.11% at 30 September 2009 (30 June 2009: 3.92%), which partially reflects book shrinkage. This reflects the investment in debt management capability and improved affordability levels as a result of low interest rates.
The Company’s stock of unsold repossessed properties has halved, from a peak of 4,201 at September 2008, to 2,193 at the end of September 2009.
