Half billion loss for Northern Rock

Northern Rock is expected to announce today that is lost £585.4m in the first six months of this year - higher than analysts had feared. The bank, nationalised last year after its collapse signalled the first wave of the global credit crisis hitting the UK, suffered from a rise in the number of homeowners failing to make mortgage payments on time. It also repayed £9.4bn of a loan from the Bank of England, reducing the amount it still owes £17.5bn.

Yesterday, it was reported that the bank would admit that around 20 per cent of its customers are in negative equity, with 140,000 homes now 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.