Debt Arrears

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B&B says mortgage arrears slowing

Article From: The Press Association (UKPA), Aug 14 2009

Nationalised lender Bradford & Bingley has said the proportion of its mortgages in arrears was slowing, despite predicting increased numbers of repossessions this year.

B&B, which is being wound down after its Government rescue, said the number of repossessed properties it held jumped by almost 50% in the first six months of the year.

The lender said that while the proportion of its mortgages in possession or more than three months in arrears had risen to 5.88%, from 4.6% for the whole of 2008, this was below expectations.

Managing director Richard Banks said: "The level of arrears is certainly below our business plan and the even better news is that over the last three months there has been a stabilisation of arrears."

B&B said three-month arrears and possessions had fallen to 5.82% of its mortgage book at the end of July.

Mr Banks said: "Possessions as at the half-year were up at 961 which was compared with 643 at the end of last year and I expect those possession levels to continue to drift up throughout the rest of the year simply because what we are seeing is the lag effect from arrears that started in the last part of last year and early part of this year."

B&B also posted a pre-tax loss of £160 million for the six months to the end of June, up from £26.7 million for the same period last year. It said the market remained difficult and it expected to see another loss for the second half of the year.

The lender said loan impairments rose to £328.4 million, from £74.6 million in the same period last year and £507.7 million for 2008 as a whole.

B&B said it works closely with customers struggling to pay their mortgage and "exhausts all reasonable efforts before commencing repossession proceedings, which is viewed as a last resort".

Mr Banks said it was usually 12 months between a customer first falling into arrears and the property being possessed.