One of the biggest stories in the financial press last year was the collapse of Northern Rock and its subsequent nationalisation by the Government. Since that time, it has remained in the news as various developments within the company have unfolded.

The latest news to come out is not something Northern Rock are likely to be very proud of, as a recent survey has shown that the major lender has suffered a higher number of repossessions on its customers’ mortgages and homeowner loans than any other mainstream lender.

According to the report, out of all the home owners in the UK who have had their property repossessed this year, one in thirteen of them held their mortgage with Northern Rock. During the first three months of this year there were a total of 134 Northern Rock borrowers facing repossession, however during the second quarter of the year, this figure had jumped alarmingly to 353.

The number of borrowers who have fallen into an arrears situation of three months or more has also increased dramatically, leading to fears that the situation could get worse before it gets better.

One reason why Northern Rock borrowers are suffering such a high level of repossessions could be down to the type of mortgages and homeowner loans offered by the organisation.

Although these loans have all been classed as prime mortgages, Northern Rock were the biggest provider of mortgage loans with a loan to value in excess of 100 per cent. Their Together range of products offered customers a mortgage loan of 95 per cent, plus an additional unsecured loan of up to 30 per cent, making a total loan to value ratio of 125 per cent.

This places borrowers into an immediate negative equity situation with their loan and when house prices have fallen, the problem becomes worse. When a borrower in this situation gets into difficulty with their repayments, there is not the same incentive for them to try and keep the house as someone who may have some equity in the property and many will be tempted to simply walk away from the problem rather than try and sort it out.

Of course, this means more expense for the already troubled Northern Rock and it is likely that these costs will be passed onto the UK taxpayers, to bail the lender out yet further.