Gross lending at Northern Rock hits £550m

Gross mortgage lending at nationalised lender Northern Rock totalled £550m in the first three months of the year, the lender reports.

The lender’s Q1 trading statement says the figure reflects mortgage completions during the period and does not take into account its plans to boost lending by up to £14bn over the next two years.

Applications in March increased by 70% compared with February while deposit balances for the quarter are at around £19.5bn.

Northern Rock has now reduced its government loan to £14.6bn as at the end of March, compared with £15.6bn at the end of last year.

The net amount outstanding to the government is £9.8bn, compared with £8.9bn four months ago.

Repossessed stock fell from 3,620 properties in December to 3,200 at the end of March, which the company attributes to its debt management strategies.

Arrears over three months have increased to 3.67% from 2.92%.

Northern Rock is one of the government-backed lenders that have signed up to the Homeowner Mortgage Support Scheme.

This allows borrowers at risk of repossession to defer up to 70% of the interest on their mortgage for up to two years.

Gary Hoffman, chief executive of Northern Rock, says: “We are implementing our new business plan, which will enable us to move forward with our lending programme.

“The revised state aid application has been submitted and we are making good progress with the legal and capital restructuring of the business – which we expect to complete in the second half of the year.

“The economic environment remains difficult but our trading performance in the quarter was in line with our expectations and we saw some early signs of mortgage applications increasing in March, reflecting pricing adjustments to our current product range.”