N Rock: negative equity rising

Northern Rock is to admit that around 20 per cent of its customers are in negative equity. The Government-owned mortgage bank says about 140,000 homes may now be worth less than the mortgage debt their owners face, which could lead to the state reposessing homes. Many of the affected home owners live in the north-east of the country where the bank was the dominant mortgage provider.

The negative equity reflects the aggressive selling of mortgages of up to 125 per cent of the value of a home. At the end of 2007, only 0.29 per cent of the homes on the bank's books had been reposessed, but that number has now risen to 0.95 per cent in the latest figures.