Nearly a Third of Northern Rock Borrowers Underwater

March 3, 2009 No Comments »


If you thought things were bad stateside, take a look at what’s going on over in the United Kingdom.

Northern Rock, a large UK mortgage lender that was nationalized last year after its collapse, revealed that 170,000 of its 590,000 borrowers had negative equity.

That equates to about 28 percent of its customers, with £22 billion of Northern Rock’s £66.7 billion home loan portfolio now underwater.

The figures back up a report released last week by market research firm GfK, which suggested, much to economist skepticism, that one in three mortgage holders in the UK was in a similar position.

The unprecedented number of borrowers owing more on their mortgages than the value of their homes could be attributed to double-digit property value declines and high-risk mortgage products, such as the Together mortgage, which allowed negative amortization up to 125 percent.

Northern Rock has also seen its stock of repossessed homes rise 63 percent from a year earlier.

In the United States, it is estimated that one in five homeowners are currently underwater on their mortgages, though that number is sure to rise.

In Nevada, roughly half of homeowners are currently underwater, thanks to zero down financing and plummeting property values.

(photo: iowaspiritwalker)

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