Wednesday, 15 October 2008
Northern Rock seizes 11 homes a week
From the Daily Telegraph
Northern Rock has become the most "ruthless and aggressive" repossessor of properties, a leading MP has claimed, after figures showing that the nationalised bank is seizing 11 homes a week.
By Harry Wallop, Consumer Affairs Editor
The bank, which was taken into state ownership in February this year, took back the keys from 4,201 home owners in the nine months to the end of September.
This is a far higher rate of repossessions than most other mortgage companies are implementing.
One in every 108 Northern Rock customers has had their homes take from them. This compares to a national average of one in every 250 customers having their homes taken from them, according to the Council of Mortgage Lenders.
Campaigners said that this was proof that Northern Rock was being a "ruthless and aggressive" and that it was an ominous sign that the Treasury would crack down on late-paying mortgage customers now that it had stakes in nearly half the entire country's mortgages.
In recent weeks it has taken control of Bradford & Bingley's mortgage book, as well as taking stakes in Royal Bank of Scotland, HBOS and Lloyds TSB. Along with Northern Rock it now partly controls 44 per cent of the UK's 11.7 million outstanding home loans.
Labour MP John McDonnell, who heads the think tank Left Economics Advisory Panel, said: "We fully nationalised Northern Rock, yet the Government's bank is becoming the most ruthless and aggressive repossessor under the cosh of Government pressure to repay the loans. The Government is in danger of being seen as protecting banks while ignoring people."
Experts pointed out that it was understandable that Northern Rock would have a higher repossession rate than the industry average, because the bank had been one of the most generous lenders, offering low rates to customers with often poor credit records – one of the reasons it got into trouble, and collapsed last year.
However, Adam Sampson, the chief executive of the housing charity Shelter, said: "It is very interesting to see how the Government is flexing its new found muscle, now that it owns, or part-owns, more than 40 per cent of the mortgage market.
"I have sat in meetings this week when ministers lectured mortgage lenders about their social responsibilities. It is ironic if ministers were now presiding over the most aggressive repossession policy in the market."
So far, the credit crisis and the deteriorating condition of the housing market has not hit too many home owners, with 18,900 houses repossessed in the first six months of this year – a modest rate of home seizures compared to the early 1990s, when nearly 40,000 homes were repossessed in a half-year.
However, experts warn that it will not be until next year that the crisis hits home, because it takes many months from the point when a home owner first gets into trouble with their payments and when the mortgage company finally seizes the home.
A spokesman for Northern Rock said that its rate of resposessions was because of market conditions. "It's regrettable when we have to repossess anyone, but the market is deteriorating – as it is for everyone. We only repossess a house as a last resort."
The Treasury insisted that any decision to seize a home was made by the individual banks, not by the Government.
"We have said we will operate all these mortgage books at an arm's length, and operate them as commercial organisations."