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UKAR returns £6.2bn to govt. as mortgage book shrinks

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  • 03/06/2014
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UKAR returns £6.2bn to govt. as mortgage book shrinks
UK Asset Resolution (UKAR) has paid a further £6.2bn back to the government as it continues to run off its book of ‘toxic’ mortgage loans.

UKAR, which holds the bad loans made by Northern Rock and Bradford & Bingley, saw its number of customers fall from 614,000 at the end of 2012 to 467,000 on 31 March 2014.

During the same period the number of mortgage accounts dropped to 529,000 from its previous level of 586,000.

In the 15 months to 31 March 2014 the organisation returned £6.2bn to government. This compares to £4bn in the 2012 calendar year. Around £5.1bn of the latest repayment was for UKAR’s principal loans from government and this means £10.4bn has been returned to the taxpayer since its formation in October 2010.

The proportion of mortgage accounts in arrears has dropped 39% in the last 15 months, falling to 15,483 at the end of March 2014.

UKAR’s total residential mortgage book has fallen to £59.3bn from £66bn since the last annual results. Around 46% of its residential mortgage accounts are interest-only, with 73% of these having more than 10 years until maturity.

The percentage of UKAR loans worth more than the value of the property has fallen from 33% at the end of 2012 to 17.9% in March 2014. During the same period the proportion of loans between 75% and 100% LTV grew from 45.3% to 52.7% of UKAR’s back book.

Richard Banks, UKAR chief executive, said: “UKAR has continued to make good progress over the past 15 months, with government loan repayments of £5.1bn bringing total repayments to over £10bn since the formation of UKAR.

“It is also pleasing to see the significant reduction in arrears due to the dedication and professionalism of colleagues proactively working with our customers to help them achieve the right outcomes.”

Underlying profit before tax was £1,523m for the 15 months and £1,259m for the 12 months to 31 March 2014, £186m higher than the 12 months to 31 March 2013.

UKAR said its costs had fallen 32% since the formation of the organisation in 2010.

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