Northern Rock shrugs off rise in arrears

NATIONALISED mortgage lender Northern Rock reported an increase in arrears today, but said it was making "solid progress" with its business plan.

Executive chairman Ron Sandler said economic conditions combined with a shrinking loan book meant mortgages three months in arrears rose to 0.95% at the end of April, compared with 0.57% at the end of December.

However, he added that the overall credit quality of the loan book remained satisfactory.

A key part of Northern's plan has been to reduce its balance sheet to a sustainable level.

However, Mr Sandler said current uncertainty in the UK mortgage industry had made this target more challenging.

He added: "We remain firmly focused on our business priorities of repaying the Government debt, releasing the guarantee arrangements and, in due course, returning Northern Rock to private ownership."