Northern Rock borrowers running into financial problems
October 5, 2008
Recent research has suggested that Northern Rock mortgage customers may be running into financial problems at a far faster pace than other borrowers, with repossession figures showing that a large proportion of homeowners that have been losing their homes are Northern Rock borrowers. The research was carried out by Standard and Poor, and indicated that one in every thirteen repossessions was a Northern Rock homeowner.
Northern Rock ran into problems last summer with the onset of the global credit crunch, and earlier this year it was the subject of a government bailout and was nationalised. However, it seems that mortgage customers of the bank are still running into problems in terms of their finances, with many facing repossession. The results of the survey also showed that many Northern Rock borrowers were also three months or more behind on their mortgage repayments.
The data from Standard and Poor showed that in the first quarter of this year around 134 Northern Rock borrowers were facing repossession, but by the second quarter of the year this had risen to 353, reflecting the pace at which consumers have been running into financial problems. The sharp rise in the number of consumers who are ninety days or more behind with their mortgage repayments would also indicate that there could be a rising number of people facing repossession in the coming months.
Some industry officials have suggested that the rising problems amongst Northern Rock customers could result in taxpayers having to plough in more money for the bailout. The US government, in the meantime, has had to make a similar move to bailout mortgage giants Fannie Mae and Freddie Mac, which have been subject to a federal takeover recently.
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