Northern Rock has another £4.45bn to lend in 2009

Northern Rock goes on to say that during March 2009, they enhanced the competitiveness of their mortgage products, resulting in the number of mortgage applications increasing by around 70% compared with February. The quality of new lending remains high, with the average loan to value of new lending in the first quarter of 48%.

A lot more customers are staying with Northern Rock, reflecting steps taken to slow down the rate of redemptions and also the prevailing interest rate environment, with approximately 90% of customers moving to Northern Rock’s standard variable rate when their fixed deals expire.

Northern Rock has maintained retail savings balances within the constraints of its self-imposed competitive framework, with balances of around £19.5 billion. Non-retail funding balances have continued to reduce in line with planned contractual maturities.

Northern Rock has continued to reduce the gross loan outstanding to the Government to £14.6 billion at 31 March 2009 (31 December 2008: £15.6 billion). Liquidity balances held with the Bank of England (excluding collateral balances) have reduced from £6.7 billion to £4.8 billion following the planned repayment of wholesale debt maturing in the first quarter. After the deduction of these balances, the net amount outstanding to the Government at 31 March 2009 was £9.8 billion (31 December 2008: £8.9 billion).

The Company’s stock of unsold repossessed properties has continued to fall, from 3,620 at December 2008 to 3,200 at the end of March 2009, reflecting the development of debt management strategies.

As anticipated, the Company’s residential arrears over three months have increased to 3.67% at 31 March 2009 (31 December 2008 - 2.92%). Northern Rock has noted tentative signs of improvement in early arrears trends (arrears under three months), reflecting the investment in its debt management capability and improved affordability levels as a result of falling interest rates.

Northern Rock has signed up to the Government’s Homeowner Mortgage Support Scheme (HMSS) and is one of the first lenders to operate the scheme. The HMSS is designed to support households who have suffered a temporary loss in income. Under the scheme, households at risk of repossession will be able to defer up to 70 per cent of the interest on their monthly mortgage payments for up to two years.

Gary Hoffman, Chief Executive, said: "We are implementing our new business plan, which will enable us to move forward with our lending programme. The revised State aid application has been submitted and we are making good progress with the legal and capital restructuring of the business - which we expect to complete in the second half of the year. The economic environment remains difficult but our trading performance in the quarter was in line with our expectations and we saw some early signs of mortgage applications increasing in March, reflecting pricing adjustments to our current product range.

"At Northern Rock we remain committed to working with all our customers and to assist those who may be under pressure financially, providing the best possible support we can in all circumstances. We have invested heavily in our debt management activities and are beginning to see some signs of improvement in early arrears. We have also announced this week that we are one of the first lenders to join the Homeowner Mortgage Support Scheme, which will serve as an additional tool to help customers facing financial difficulty to remain in their home."