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Written by rosalind renshaw

UK Asset Resolution, the state-owned lender set up to take on mortgages from Bradford & Bingley and Northern Rock, has 100,000 customers who could default on their loans.

They took out interest-only mortgages and, says UKAR, have no credible plans to repay them.

The 100,000 account for one-sixth of UKAR’s total borrowers and are mainly buy-to-let borrowers.

Around 60% of UKAR’s total borrowers took out interest-only mortgages. Of this proportion, two-thirds have either no idea how they will repay the loan or only the haziest idea. Some 5% do not even know that they have an interest-only loan.

The majority of the interest-only mortgages will mature towards the end of this decade, leaving borrowers with an eight-year deadline.

Richard Banks, chief executive of UKAR, said that 10% of his customers are already in trouble with their mortgages.

UKAR also revealed that nationalised bank Bradford & Bingley repaid £788m of Government loans in the first half of the year, taking the total owed to the taxpayer down to £45.8bn.

The number of B&B mortgages three or more months in arrears fell 19% to 7,064.

Pre-tax profits at B & B fell from £202.5m in the first half of 2011 to £45.7m in the six months to the end of June, mainly because of increased interest on its loan from UK taxpayers.

When Bradford & Bingley was nationalised in 2008 the branches were sold and the mortgage book passed to UKAR along with part of the old Northern Rock business.

Banks said: “We have made strong progress in the first half with further repayments to the Government.

“Much of our focus is on helping those of our customers who are in financial difficulty and it is pleasing to see a further significant reduction in arrears levels despite the continued economic uncertainty and pressure on consumers’ finances.”

UKAR recently sold £465m of Northern Rock mortgages to Virgin Money, and will use the proceeds to repay more of its outstanding loan.

Comments

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    Why would they publish such a story, where is the gain for them, has to be an angle these sad bankers want to use to cover their problems, I just cant fathom what yet!

    Anyone, there has to be an hidden agenda here?

    • 01 August 2012 13:54 PM
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    Jap.. oh whats the point!

    • 31 July 2012 17:32 PM
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    • 31 July 2012 17:30 PM
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    Good time for someone to put some money into "www.ukrepos.co.uk" (quick example name off the top of my head), would save customers coming in here every 10 mins and asking "you got any repo's mate....

    There will definitely be one dimwit that reads this who is setting up his own "online agent", ditch that and run with this instead!

    • 31 July 2012 10:21 AM
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    Then do your job, stop pontificating and blaming others. Work harder to get the rents up for the benifit of your client.

    • 30 July 2012 16:14 PM
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    @Al, first let me say that I agree with you.

    Then let me say that if a fully accredited financial advisor advises you that you could split your sensible deposit into 2 and buy 2 flats instead of 1 and in 20 years property prices will be double (here - just look at this graph), why would you do anything other than take them up on it.

    I am quite a big letting agent and have several landlords who were caught by this.

    They are not in negative equity as such, prices have stayed firm here, but their mortgage rates are higher and the service charges have gone up.

    They are often now subsidising their tenants to the tune of £25-50 per week.

    OUCH!

    And what with fees and charges and the fact this has been going on for several months, their deposit money has vanished.

    • 30 July 2012 15:42 PM
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    I sell the house to repay the loan innit

    • 30 July 2012 13:17 PM
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    Good article, exposes the charade of many 'investors' 'business plan'- infinite capital gains required and a mug willing to buy it when they wanted to offload.

    Shame on muggins the taxpayer for backstopping this nonsense.

    • 30 July 2012 10:37 AM
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