Mortgage problems are expected to grow warns state giant UKAR

THE state-owned company that took on assets from bailed-out lenders Northern Rock and Bradford & Bingley yesterday warned it was braced for an increase in customers struggling to cope with their mortgages.

UK Asset Resolution (UKAR), which has some 655,000 customers, said the uncertain economic outlook, rising cost of living and falling house prices would lead to more customers experiencing difficulties and was planning to step up measures to help.

UKAR, which revealed a further £788 million repayment to the UK government, bringing the total owed down to £45.8 billion, said around 10 per cent of its customers were finding it difficult to meet mortgage repayments.

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The government split Northern Rock in two at the start of last year, forming Northern Rock plc, which was sold to Virgin Money, and Northern Rock Asset Management (NRAM) to house the more toxic loans. B&B merged with NRAM shortly after it was formed.

The total number of mortgage cases three or more months in arrears fell by 9 per cent since the end of 2011 to 30,222. The total amount of arrears owed by residential customers fell by 8 per cent or £18.8m to £215.1m in the period. In the first half of 2012, UKAR made 34,000 mortgage arrangements and account changes to help customers with repayments. The number of repossessions fell by 15 per cent to 3,871 in the period.

Richard Banks, chief executive of UKAR, said: “Much of our focus is on helping our customers who are in financial difficulty and it is pleasing to see a further significant reduction in arrears levels despite the continued economic certainty and pressure on consumers’ finances.”

Northern Rock was nationalised in February 2008 after it collapsed amid the credit crisis, sparking the first run on a UK bank for 150 years.

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