Bank says new mortgage lending was £1bn short of predicted levels

Northern Rock has posted a pre-tax loss of £724.2m for the six months to 30 June 2009, compared with £585.4m in the same period last year.

The nationalised bank said that new mortgage lending would be £1bn less than the £5bn predicted in February.

It said it expected to increase new lending once restructuring and capital injection had been completed.

Northern Rock was nationalised in February 2008 after its model of borrowing to finance lending was hit by the credit crunch.

The bank said that 3.92% of its mortgage loans were more then three months in arrears, compared with the national average of 2.39%.

The number of repossessions by Northern Rock fell 30% to 2,522 at 30 June. The bank said it had doubled staff in its debt management operations and claimed it would not take possession of a property until at least six months after the first arrears.

The bank said consumer confidence was “finely balanced reflecting expectations for increased unemployment in the coming months”. It added that mortgage applications doubled in the second quarter of 2009, reflecting lower interest rates.

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