Northern Rock is set to report first-half losses of £500m today due to rising impairments in its mortgage book.

The bank, which was nationalised in February, is expected to be loss making until 2010 but its latest figures far exceed the £199m loss which the bank reported for the whole of 2007.

It is understood that much of the losses are due to rising bad debts in its UK mortgage book. Northern Rock said in May the number of borrowers behind with repayments had jumped sharply since it was nationalised.

In its first quarter of 2008 the number of mortgages where payments were behind by three months or more leapt to 0.95% of its outstanding loan book, almost double the figure of 0.57% at the end of December.

Financial Times, Daily Telegraph