Northern Rock unveils surge in mortgage loans
NORTHERN Rock saw improved trading in the third quarter, with encouraging trends on bad loans, and forecast a “significant improvement” in the second half of the year.
But the state-owned lender, which is being split into two in readiness for a sale, warned that conditions in the mortgage and housing markets remained subdued.
“House price declines have moderated in recent months, but the company remains cautious as to the medium-term outlook, given rising levels of unemployment and weakness in the wider economy,” said Northern Rock. “While recent trends have been encouraging, loan loss impairment is expected to remain a driver of the company remaining loss-making for the full year, as previously announced.”
The lender said its third-quarter performance improved on an underlying and statutory basis, reflecting higher net interest income and lower loan loss impairment. Gross mortgage lending during the quarter accelerated to £1bn, taking loans over the nine months to the end of September to £2.3bn. The bank said the quality of new lending remained high, with the average loan to value ration of new lending at 55 per cent.