Losses incurred by Northern Rock on repossessed homes soared nearly four-fold during 2008 as the economy deteriorated, figures showed today.
The nationalised bank saw the steep increases in losses on mortgages that are held in its Granite securitisation vehicle, which represents around half of its total mortgage book.
Figures for December 2007 showed that Granite had lost £10.2m from repossessed homes since it was first set up in 2001, but by December last year, the figure had mushroomed to £45.9m - a 350 per cent increase.
The securitisation vehicle made losses of £8.7m from the properties during December alone, with an average £19,348 loss per property that was repossessed.
The repossession situation at Northern Rock, which has been criticised in the past for its approach to people who are in mortgage arrears, looks set to get worse this year with rising unemployment and the country in recession.
Around 6.3 per cent of mortgages held by Granite are currently in arrears of at least a month, a three-fold rise from only 2.19 per cent in December last year.
Within this total 2.88 per cent of borrowers are at least three months behind with their mortgage repayments, up from only 0.68 per cent 12 months earlier.
Around 1.33 per cent of homeowners, the equivalent of about 3,719 borrowers, were also in negative equity in December, meaning that their property is now worth less than the mortgage they have secured against it.
A further 10 per cent of borrowers had mortgages worth between 95 per cent and 100 per cent of their home's value, while nearly 21 per cent had loan to value ratios of 90 per cent to 95 per cent.
The current loan to value situation is likely to be worse than the figures suggest, as the value of the property is based on calculations made when the mortgage was taken out.
Repossession and arrears levels are thought to have soared during 2008 as rising unemployment left increasing numbers of households struggling to pay their mortgage.
Falling house prices meant rising numbers of homeowners found themselves in negative equity, while the depressed housing market and the problems caused by the credit crunch restricted the options for people who still had equity in their homes to sell their property and clear their debt.
The Council of Mortgage Lenders has not yet published figures on repossessions for 2008.
But it has previously estimated that around 45,000 people lost their homes during the 12 months, up from 26,200 in 2007.Reuse content