Northern Rock unveils surge in mortgage loans

NORTHERN Rock saw improved trading in the third quarter, with encouraging trends on bad loans, and forecast a &ldquo;significant improvement&rdquo; in the second half of the year.<br /><br />But the state-owned lender, which is being split into two in readiness for a sale, warned that conditions in the mortgage and housing markets remained subdued.<br /><br />&ldquo;House price declines have moderated in recent months, but the company remains cautious as to the medium-term outlook, given rising levels of unemployment and weakness in the wider economy,&rdquo; said Northern Rock. &ldquo;While recent trends have been encouraging, loan loss impairment is expected to remain a driver of the company remaining loss-making for the full year, as previously announced.&rdquo;<br /><br />The lender said its third-quarter performance improved on an underlying and statutory basis, reflecting higher net interest income and lower loan loss impairment. Gross mortgage lending during the quarter accelerated to &pound;1bn, taking loans over the nine months to the end of September to &pound;2.3bn. The bank said the quality of new lending remained high, with the average loan to value ration of new lending at 55 per cent.