Bradford & Bingley admits 50% rise in home repossessions

State-owned Bradford & Bingley today bucked an improving national trend in home repossessions by admitting it had seized more properties from its defaulting mortgage customers in the first half of this year.

The near 50% rise in the number of repossessed homes on B&B's books came as new figures showed government pressure on lenders to go easy on struggling homeowners had contributed to a drop in foreclosures.

At B&B Richard Banks, managing director, warned that repossessions would continue to rise until the end of this year, reflecting the sharp rise in the number of customers who began falling in to difficulty in 2008. Banks joined B&B in May on a salary of £250,000 a year.

The Council for Mortgage Lenders said 11,400 properties were repossessed in the four months to June, a drop of 10% on the previous quarter but up from 10,000 in the second quarter of 2008. Falling interest rates eased the pressure on home-loan payments, with the CML reporting only a small increase in customers missing four or four monthly repayments.

B&B, taken in to public ownership last September, today announced an increase in its losses to £160m in the first half of 2009. But, the number of troubled customers isn't as high as B&B had budgeted for & its arrears level has probably peaked. The lender has now set aside £270m to cover fraud & professional negligence from applicants for its buy-to-let & self-certification mortgages. Some 21,102 B&B customers – 6% of its customers – are over four months in arrears or have been repossessed. At the end of June the bank had 961 homes under repossession, some 300 over at the end of December.

It insisted it worked closely with customers experiencing difficulties & exhausted "all reasonable efforts" before starting repossession proceedings, which it viewed as a last resort.

The number of people over four months in arrears was 270,400 at the end of June, up from 152,700 a year earlier, according to the CML. The past four months showed a marked slowing in the rate of increase in arrears from 264,700 at the end of March.Shadow Housing Minister Grant Shapps urged the government to do more. "In the first four months of this year, 4,200 people approached local authorities to seek help from Gordon Brown's delayed Mortgage Rescue process – but six families throughout England got any assistance. It's time the Government stopped trying to grab fast headlines & brought in policies to help vulnerable families," they said.


The government poured £18.4bn in to B&B last September to replace the customer deposits taken on by Abbey during the height of the banking crisis. B&B was also given £8bn of working capital in the first half – up from £2.2bn at the end of last year, to permit it to continue operating. The CML has predicted that 65,000 people will lose their homes this year & warns repossessions could rise again in the second half of the year. CML's head of owner Jackie Bennett said: "With unemployment rising & the economy still weak, the outlook will remain challenging for the rest of this year & in to 2010. But the data shows that lenders are committed to helping borrowers manage their way through temporary payment problems & get their mortgage back on track over time, avoiding possession where possible."