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| Bradford & Bingley mortgage sale raises £11.8bn | Bradford & Bingley mortgage sale raises £11.8bn |
| (about 2 hours later) | |
| The government has sold buy-to-let mortgages belonging to failed lender Bradford & Bingley for £11.8bn. | The government has sold buy-to-let mortgages belonging to failed lender Bradford & Bingley for £11.8bn. |
| Insurance firm Prudential and investment firm Blackstone have teamed up to buy the loans. | Insurance firm Prudential and investment firm Blackstone have teamed up to buy the loans. |
| The government took on the mortgages of Bradford & Bingley after rescuing the lender in 2008. | The government took on the mortgages of Bradford & Bingley after rescuing the lender in 2008. |
| UK Asset Resolution (UKAR), which has been handling the sale, says that terms and conditions for the 104,000 loans will not change. | UK Asset Resolution (UKAR), which has been handling the sale, says that terms and conditions for the 104,000 loans will not change. |
| The deal is one of the biggest asset sales by a European government. | The deal is one of the biggest asset sales by a European government. |
| "The sale of these Bradford & Bingley assets for £11.8bn marks another major milestone in our plan to get taxpayers' money back following the financial crisis," Chancellor Philip Hammond said in a statement. | "The sale of these Bradford & Bingley assets for £11.8bn marks another major milestone in our plan to get taxpayers' money back following the financial crisis," Chancellor Philip Hammond said in a statement. |
| "We are determined to return the financial assets we own to the private sector and today's sale is further proof of the confidence investors have in the UK economy." | "We are determined to return the financial assets we own to the private sector and today's sale is further proof of the confidence investors have in the UK economy." |
| Assets sold | Assets sold |
| Bradford & Bingley had been a conservatively-run building society, but in 1999 abandoned its mutual status and moved into riskier areas of lending. | Bradford & Bingley had been a conservatively-run building society, but in 1999 abandoned its mutual status and moved into riskier areas of lending. |
| That strategy backfired in 2008 when the UK housing market slumped amid the global financial crisis. | That strategy backfired in 2008 when the UK housing market slumped amid the global financial crisis. |
| When Bradford & Bingley was rescued that year, its branches and deposit accounts were sold to Spain's Santander, while the government took over responsibility for the mortgages. | When Bradford & Bingley was rescued that year, its branches and deposit accounts were sold to Spain's Santander, while the government took over responsibility for the mortgages. |
| UKAR was set-up in 2010 to manage that portfolio of mortgages, as well as loans taken on following the collapse of Northern Rock. | UKAR was set-up in 2010 to manage that portfolio of mortgages, as well as loans taken on following the collapse of Northern Rock. |
| It started with £116bn worth of loans on its books and the latest sale cuts those holdings to £22bn - of that £12.7bn originated from Bradford & Bingley and £9.7bn originally came from Northern Rock. | It started with £116bn worth of loans on its books and the latest sale cuts those holdings to £22bn - of that £12.7bn originated from Bradford & Bingley and £9.7bn originally came from Northern Rock. |
| UKAR says the remaining loans are a mix of performing and non-performing loans. Around half are residential mortgages while the rest are buy-to-let. | UKAR says the remaining loans are a mix of performing and non-performing loans. Around half are residential mortgages while the rest are buy-to-let. |
| A non-performing loan is generally classified as one where the borrower has not made a scheduled payment for more than 90 days. | A non-performing loan is generally classified as one where the borrower has not made a scheduled payment for more than 90 days. |
| Analysis: Simon Gompertz, BBC personal finance correspondent | Analysis: Simon Gompertz, BBC personal finance correspondent |
| When you sell a bunch of mortgages, what matters to the buyer is who the borrowers are and whether they are likely to pay their loans back. | When you sell a bunch of mortgages, what matters to the buyer is who the borrowers are and whether they are likely to pay their loans back. |
| All of these former Bradford & Bingley borrowers are buy-to-let investors. | |
| 90% are on average interest rates of only 1.75% above Bank of England base rate, which is currently 0.25%. | |
| And, typically, they have managed to invest in more than one property, an average of 1.8 each. | And, typically, they have managed to invest in more than one property, an average of 1.8 each. |
| In other words, out of the rubble of what remains of the stricken lender, these are the most solid looking prospects. | In other words, out of the rubble of what remains of the stricken lender, these are the most solid looking prospects. |
| What's left in the portfolio which remains with the taxpayer? Some more buy-to-letters and, crucially, 56,000 residential borrowers. | What's left in the portfolio which remains with the taxpayer? Some more buy-to-letters and, crucially, 56,000 residential borrowers. |
| They include many stuck on an interest rate of nearly 5%, thousands in financial difficulty and over a thousand who have been referred for help in dealing with debt. | They include many stuck on an interest rate of nearly 5%, thousands in financial difficulty and over a thousand who have been referred for help in dealing with debt. |
| Offloading these loans is likely to be much more difficult. | Offloading these loans is likely to be much more difficult. |