100,000 may default on mortgages
UKAR, the state-backed lender that took on Bradford & Bingley and Northern Rock mortgages, has confirmed it has more than 100,000 customers with no credible plan to repay interest-only home loans.
The controversial loans, where customers simply pay interests costs rather than capital, account for 60% of their 600,000 borrowers loans.
Two-thirds of those with interest-only mortgages on their main home have only a vague plan for how they will make the repayments. 5% do not even realise they have an interest only deal.
The risk is that people could lose their homes if they are unable to repay or rearrange the mortgage at the end of the term.
Most of the mortgages will mature towards the end of this decade, leaving customers just eight years to raise the remaining cash.
Richard Banks, the chief executive of UKAR, said around 10 per cent of customers overall are in trouble with their home loan, which is twice the industry average.
The group repaid £788m in loans to the government, taking the total it owes the taxpayer down to £45.8bn.&
Profit for the half year was down 18 per cent to £481.4m, but that does not count a £143m profit it made recently by buying mortgage securities backed by its own home loans for less than their face value.
What will this mean for negligent conveyancers? Will these firms see increasing numbers of claims on their professional indemnity polices?