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Rock racks up pounds 724m half-year loss.

NATIONALISED North-east lender Northern Rock reported a half-year loss of pounds 724.2m today as borrowers struggled to repay debts.

The Newcastle-based company said the number of mortgages in arrears had risen to 3.92% of loans by June 30, from 3.67% three months before.

Northern Rock, which was taken into public ownership in February 2008, said it incurred an impairment charge on its loans of pounds 602.2m and expected that figure to be similar in the second half.

Northern Rock was notorious for its Together loans which lent up to 125% of home values.

It is these loans that are responsible for the soaring numbers of mortgages which are more than three months in arrears, although the lender said the number of properties repossessed as of June 30 was 2,522, compared with 3,620 at the end of 2008.

The Rock was at the centre of the first bank run in 140 years in September 2007 as the credit crunch exposed its over-reliance on money markets. The crisis forced it to turn to the Bank of England for pounds 26.9bn in emergency funding before being nationalised when sale attempts fell through. Northern Rock now owes the Government pounds 10.9bn after paying back at a faster than anticipated rate as it encouraged borrowers to seek deals elsewhere.

The Government ordered it to change tack earlier this year and the bank is now increasing lending and delaying repayment.
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Publication:Evening Gazette (Middlesbrough, England)
Date:Aug 4, 2009
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