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The number of Northern Rock customers falling behind on their mortgage or losing their home altogether soared last year, according to its annual report for 2008.
The nationalised bank reported this morning that by 31 December 17,264 customers were at least three months in arrears, up from around 3,500 at the start of the year. That is nearly 3% of its customer base, up from 0.45% a year ago.
It blamed the "adverse economic environment", but also admitted that its policy of encouraging borrowers to move to another lender was a factor.
The rise in arrears was particularly serious for Northern Rock's controversial Together mortgages, which allowed people to borrow more than the value of their home - in some cases up to 125%.
Today's report shows that 4.52% of Together customers are over three months in arrears, up from 0.95% a year ago. That is more than double the industry average, of 1.88%. The bank stopped selling Together mortgages a year ago.
Northern Rock also revealed that on 31 December it was holding 3,620 repossessed properties, a 63% increase on a year ago. Its stocks of repossessed houses peaked last autumn, when it was holding 4,201. This increase was despite Northern Rock's policy of not starting repossession proceedings until a customer is at least six months behind with their mortgage payments.
"Unfortunately, given the external economic backdrop it is likely that repossessions will continue to be a feature of the market over the coming year, but our aim is to work closely with customers and to keep the level of enforced possessions to a minimum," said chief executive Gary Hoffman.
Northern Rock confirmed that it made a loss of nearly £1.4bn for 2008, mainly due to bad loans.
Last week, Northern Rock announced that it will offer £14bn of new mortgage lending.
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