Pensioners ‘high risk’ over arrears

The state-owned firm responsible for winding down the mortgage books of failed lenders Bradford & Bingley and Northern Rock is to launch a new campaign to help thousands of customers who are about to retire before paying off their mortgage.

Northern Rock failed in 2007

UKAR, whose job is to maximise value for the taxpayer after the two banks were bailed out at the height of the banking crisis, has identified pensioners as the next high risk area where customers could fall into arrears.

UKAR’s chief executive Richard Banks said: “Around 90,000 customers will still be paying back their mortgage when at least one of the joint account holders retires. It’s an area we want to understand better.”

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UKAR has launched a marketing trial to find out the issues facing people nearing retirement age.

The new campaign follows last year’s successful move to help interest-only mortgage customers avoid repossession.

The firm wrote to 26,000 customers who had 10 years or less to run on their mortgages to give them advice about how to overcome any funding shortfalls so they could keep their homes.

Interest-only mortgages were a controversial means of helping cash-poor customers get on the housing ladder before the banking crisis.

Mr Banks said the interest-only campaign has received “an excellent response” with 90 per cent of customers saying they have a viable plan to pay off the mortgage once it comes to an end.

He was speaking yesterday as UKAR announced half year results, showing it paid £1.9bn to taxpayers in the six months to June 30, up from £1.2bn in the first half of 2012.

Underlying pre-tax profits rose 10 per cent to £529m after arrears fell 17 per cent to 21,332 since the start of 2013.

The number of repossessions fell from 3,871 to 3,550.

UKAR has 584,000 customers with 565,000 mortgage accounts and 212,000 unsecured personal loan accounts. Mr Banks said the majority of these loans continue to perform well with more than 90 per cent of mortgage customers up to date with their mortgage payments.

“However, we do have a significant number of customers who are finding it difficult to meet their repayments. In those cases, we work closely with customers to offer a range of solutions,” he said.

During the first half, 37,000 arrangements were completed and 1,200 account modifications were made to help customers pay their mortgage.

Mr Banks said these modifications include payment breaks, a temporary switch to interest-only mortgages and payment term extensions.

UKAR is also working with a range of non-fee charging debt advice agencies such as the Citizens Advice Bureau, Payplan and StepChange to help customers reorganise their finances and keep their homes.

Research conducted by YouGov and the Money Advice Service shows that individuals who seek advice are twice as likely to have their debt become manageable within 12 months compared to those who do not.

The number of UKAR customers referred to debt advice agencies in the first half of 2013 was 2,413, similar to last year’s figure.

Mr Banks said the book’s improving health will increase its attractiveness to potential buy- ers.

“The better the economy, the fewer customers are in arrears and the more valuable these loans will be,” he said.