1. little professor said...

3.92% arrears rate is huge.

Things looked so different just two years ago:

Independent, April 2007:

Northern Rock yesterday predicted surging business as people seek to reduce the burden of high interest payments by using mortgages to refinance their debt.

An upbeat Adam Applegarth, chief executive, also dismissed fears of a housing market crash, saying that prices should rise in line with average earnings - between 4 and 6 per cent - outside London.

Mr Applegarth added: "Five years ago, the housing market was 90 per cent of the mortgage market, but that is not so any more. We are now 50-50 between people buying new houses and people remortgaging, using their mortgage to refinance debt and cut the interest bills from credit cards for example. Against that background, it is quite logical to see strong mortgage figures."

Backing his statements were figures showing total net lending was 34 per cent higher in the first quarter of 2007 than in the same period last year. Northern Rock has consistently lent above its natural market share of Britain's mortgage stock in recent years, and the company said its total lending pipeline going into the second quarter was £6.7bn, up 16 per cent.

The bank further reassured on arrears, saying its figure of 0.89 per cent was running at half the industry average. It added: "We continue to see no deterioration in our forward looking behavioural credit scores, which gives advance warning of early arrears."

Mr Applegarth pointed out that while interest rates have been rising - with economists speculating that rates will have to rise by another quarter point in the next two months - they remain "low by historic standards". He added: "Arrears are driven by unemployment, because if you have a job, you pay your mortgage. Yes, unemployment is gently going up, but employment is also rising.

James Eden, a Dresdner Kleinwort analyst, said: "Northern Rock [is] still firing on all cylinders - still our top pick in England."

Tuesday, August 4, 2009 08:35AM

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3. little professor said...

5. inbreda said...

James Eden has probably taken a whopping bonus for that pearler bit of advice. But Mr Applegarth was right about one thing - arrears are driven by unemployment. I can add that other predictors would be the size of people rainy day funds, the value of their house relative to their debt etc.

Basically NR isn't getting any better.

On Newsnight last night it stated that the banks were very important because they "pumped billions into the uk economy". They said this literally a minute and a half after pointing out that the taxpayer has "contributed 1.29 trillion" to keep the b*******s afloat!!!

Give me 1.29 trillion, take off the tax, and I can justify it by saying I am important to the f****g economy! Grrr!!! Lazy journalism. People have still not woken up to the fact that they have to get 2 extra jobs for the next 10 years to pay off the money we've given to the banks.

7. Tenyearstogetmymoneyback said...

Superb research Little Professor @1
I wonder how many people back in 2007 were remortgaging to pay the mortgage.

In Robert Pestons latest blog he points out how the arrears figure is bound to be higher than
average as they encouraged all the credit worthy people to take their mortgages elsewhere.