Northern Rock accelerates mortgage lending

07:54 | 04.11.09

The Newcastle-based lender said on Wednesday that third quarter figures to September 30 would show an improvement on an underlying and statutory basis following higher net interest income and lower loan loss impairment.

Statutory year end figures from Northern Rock would also be boosted by the recognition of a £445m rebate after European regulators last week approved a UK government plan for a radical restructuring of the bank, allowing it to split itself into two.

However, the bank said conditions in the mortgage and housing markets remained “subdued” while continued loan loss impairments meant the bank would be loss-making in 2009.

European Union approval was “an important milestone in the process of implementing the legal and capital restructure of the business,” said Gary Hoffman, chief executive. “Our intention is to complete this by the end of the year.”

The period saw Northern Rock lend £1bn of new mortgages, taking its total for the nine months to £2.3bn. It also said the loan-to-value ratio of new lending was 55 per cent.

It has a target from the government to help revive Britain’s sluggish housing market with lending of about £4bn of new mortgages in 2009 and £9bn from 2010, depending on market demand and funding.

Financial Times

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