Borrowers with the state-owned Bradford & Bingley are defaulting on one in 20 mortgages and the failure rate is set to go even higher.

Richard Pym, B&B's chairman, told The Times that the proportion of borrowers more than three months behind on their repayments had worsened since March, when B&B reported an arrears rate of 4.6%, itself double the 2007 figure.

'It's now above 5%,' Pym said, 'and it will continue to deteriorate for the remainder of the year.' He estimated that loan losses this year would be between £600m and £700m, compared with £500m last year, as thousands more amateur buy-to-let landlords and self-certified borrowers get into difficulties.

The Times