Mortgage arrears more than double at Bradford & Bingley

Bradford & Bingley (B&B) says mortgage arrears at the firm, which was crushed by the financial crisis last year, more than doubled in the first half of 2009.

Mortgage payments at least three months late rose to 5.88% in the first half of this year, up from 2.48% in H1 of 2008.

The news came as B&B, which had been the UK's biggest buy-to-let lender before it was nationalised last September, reported a pre-tax loss of £160m, much wider than the £26.7m for the same period last year.

Bad mortgage loans cost the bank £328.4m, up from £74.6m in the previous year.

B&B blames fraud and professional negligence for the bulk of these losses, while also
taking into account house price falls that are greater than general market estimates.

Despite the increase in impairment charges, the bank says it is on track to repay the £18.4bn it owes the Financial Services Compensation Scheme (FSCS) and the Treasury for facilitating Santander's takeover of the bank's savings business and branches.

It plans to do this by running down the balance sheet and its mortgage book in an orderly fashion.

The bank says it took a number of actions to facilitate mortgage redemptions, including the introduction of an early redemption charge waiver, which resulted in a reduction in lending balances to 40.3bn, from 42.2bn last year.

But it adds it will not let its customers suffer at the expense of taxpayers' interests, waiting at least six months after a home buyer first falls behind with repayments before beginning repossession proceedings.

"While looking after taxpayers' interests, we are also helping those customers facing genuine hardship", says the bank's managing director Richard Banks.