50% of Northern Rock borrowers from 2007 are in negative equity

baileysbattlebus

Northern Rock mortgage book at the end of 2008

LTV % £m

<70% 15,746.0
70%-75% 3,147.4

75%-80% 3,670.0

80%-85% 4,366.6
85%-90% 4,993.3
90%-95% 5,841.0
95%-100% 6,832.
>100% 22,102

At the end of 2007 >100% was £432m - so a huge increase in mortgages going into negative equity.

I think what you have to bear in mind is, this isn't the number of mortages but
the value of the book. Below is the outstanding balance split by value of loan.

NR do say that the average LTV is 73%. at the end of 2007 it was 60% - but a lot of people who could remortgage did remortgage elsewhere. The ones who couldn't or who haven't come to the end of their fixed rate terms are still there. But new mortgage LTV is on average 67%.

Mortage book outstanding balances by value of loan.

value £m
£0-£100k 17,196.

£100-£250k 35,737
£250-£500k 8,862.9
£500k-£1m 3,174.1
£1m-£2.5m 1,224.8
>£2.5m 504.0

zappahey

lethal0r wrote: »

I was waiting for someone to start bangin on about local prices. oh and stop with the 'fact' semantics - you know what I call semantics? WA.NK

Its right just accept it and move on.

You may call it self abuse, and if the cap fits etc, but I prefer to call it "trying to have a reasoned discussion based on facts" not the twisting of headlines to suit an agenda.

Though reasoned discussion is something that's becoming all too rare around here.

mitchaa

lethal0r wrote: »

I was waiting for someone to start bangin on about local prices. oh and stop with the 'fact' semantics - you know what I call semantics? WA.NK

Its right just accept it and move on.

You feeling okay

Thrugelmir

amcluesent wrote: »

NR borrowers have done well. They have their own house (and plasma TV/4*4), interest rates are tiny so they can service the payments and inflation will quickly erode the real debt.

That's a whole let better then staying renting. IMHO.

NR's interest rates are some of the highest in the market for high LTV's. So their borrowers have actually got the double whammy of falling prices and high interest. So are paying heavily for their house purchase.

Reaper

GDB2222 wrote: »

The BBC says this of NR's mortgages:

33% borrowed more than 100% of house value
10% borrowed 95%-100% of house value
7% borrowed 90-95% of house value

That's 50% in total, all of which must be in NE by now, surely, as house prices are down well over 10% already?

You are making the assumption that they were all taken out at the peak of the market, wheras some of those will have been going for decades and experienced a lot of house price growth before prices started falling.

I think that's why they have to fall another 10% before the headline figure is reached.

GDB2222

Reaper wrote: »

You are making the assumption that they were all taken out at the peak of the market, wheras some of those will have been going for decades and experienced a lot of house price growth before prices started falling.

I think that's why they have to fall another 10% before the headline figure is reached.

These are new 2007 loans (or so I thought)???

BTW, yes i've made some assumptions, but they are reasonable assumptions.

zappahey

GDB2222 wrote: »

These are new 2007 loans (or so I thought)???

The story discusses two separate issues, initially that NR was still offering these loans between September 2007 (when BoE support started) and February 2008.

It then went on to talk about NR's negative equity ratios in general, not necessarily from 2007.

baileysbattlebus

GDB2222 wrote: »

These are new 2007 loans (or so I thought)???

BTW, yes i've made some assumptions, but they are reasonable assumptions.

Northern Rocks mortgage book at the end of 2008 (from the annual report)

has a value of £66.7bn (all mortgages, not just for 2007)

Of that value £22bn have become negative

They have 591k mortgages on their book

About 171k of that are Together mortgages.

64% are standard mortgages
29% are Together mortgages
7% are Buy to let

Their average LTV is 73%

In the 2007 annual report average LTV was 60% - they "encouraged" a lot of people to remortgage elsewhere during 2008 - but people on Together mortgages taken out in the last few years wouldn't have been able to go any where else - so there is now a larger proportion of these loans than there used to be.

The mortgage book in 2007 was worth £90bn - it has dropped to £66.7bn for the reasons stated above.

for new loans the average LTV is 67%

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mitchaa wrote: »

What if all those that borrowed lived in Aberdeenshire?
What if all those that borrowed have been overpaying their mortgages due to low tracker rates. What about the 2yrs worth of capital payments that has been chipping away at the original loan?
What if they bought the house for under market value, or added improvements to it to increase its value.

I do like your posts mitchaa, forever the optimist, can't fault I guy whose glass is always half full. I'm the sort of person that won't try and polish a turd, but I do admire someone who does.;)

bo_drinker

Well done Northern Rock :T More bonuses please. It was an accident waiting to happen, greed and bonuses the main reason