This figure was considerably up on UKAR’s 2011 repayment of £2.8bn with the organisation selling £465m of residential mortgages to Virgin Money during the year.
This left UKAR with 587,000 mortgage accounts at the end of 2012, down from 638,000 a year earlier. The average loan-to-value of these mortgages is 75%.
The former Northern Rock mortgages are 89% residential and 11% buy-to-let while its ex-Bradford & Bingley loans are 35% residential and 65% buy-to-let.
It said the number of its mortgages in arrears of three months or more had fallen by a quarter from 33,216 to 25,581. This meant the number of properties taken into possession fell from 8,848 to 7,326 over the year.
UKAR said that despite the economic conditions it expected to make ‘further progress’ in repaying government loans and reducing its balance sheet.
UKAR said mis-sold Payment Protection Insurance (PPI) had cost the business around £360m in payments and provisions since its formation, of which £159m was paid during the last year. It added that its contact programme for PPI customers was now nearing completion and that 150,000 customers had been contacted.
Its report added that 40 other issues arising from the former Northern Rock bank had required remediation.
Richard Pym, UKAR chairman, said: “In 2012, we completed the process of integrating B&B and NRAM, paid £4bn to the taxpayer and reduced three month mortgage arrears by an impressive 23%.
“When we launched UKAR in October 2010 we owed HM Treasury £48.7bn and by the end of 2012 that had reduced to £43.4bn. We still have a long way to go, but it remains our expectation and determination to repay that debt in full.”