U.K. battered mortgage lender Northern Rock reported a loss of £199 million ($391.55 million) over the year compared to a profit of £443 million in 2006.


Funding saw a net outflow of £12.2 billion on the retail side and £11.7 billion on the wholesale side for the year. According to a Deutsche Bank report, much of this was replaced by the emergency loan from the Bank of England, which currently makes up around a quarter of the bank’s liabilities. The bank is looking to cut its mortgage book in half and move to a funding model based more on retail to repay this loan.

The Granite master trust’s performance continues to see late stage arrears building. Deutsche Bank analysts said there is a risk of deterioration in the Granite credit performance as the lender’s efforts to shrink its book mean the borrowers with better credit get to refinance their mortgages. 

According to an HSBC report, the annualized prepayment rate for the master trust was 33.5% in February. The annualized CPR was 30.4% in January, 20.6% in December, 26.6% in November and 35.8% in October. At the current CPR, the structure would need to replenish the pool in order to meet the minimum seller share requirement.


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