Cloud over Rock’s ability to repay BoE loan

In all £53bn worth of
’s mortgages – more than 70% of its mortgage portfolio – is owned by a
Jersey-based trust company, which leaves a huge hole in the pool of assets
available to provide collateral for its creditors, including the Bank of
England, The Guardian reports after an examination of Northern Rock’s

The same investigation reveals the troubled bank is extremely vulnerable a
slump in the property market and calls into question
that taxpayers’ money is safe.

Among the findings are mortgage loans of more than 90% of the purchase price
of a house over three years have soared to £16bn – up from £2.7bn; loans have
exceeded the value of the property on nearly 2,500 mortgages, valued at £263m,
up from £13m on 158 properties three years ago; 10,000 Northern Rock customers
are a month or more in arrears on their mortgages, on loans worth nearly £1.2bn
compared with 2003, when only 2,500 were in the same difficulties, involving
mortgages worth £168.8m.

In 2003 Northern Rock repossessed 80 properties. Last year more than 1,000
properties were repossessed. By the end of September, 912 properties had already
been repossessed.

Further reading:

Northern Rock sale faces Treasury veto

Rock FD survives board clear out

story in The Guardian

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