By Kevin Peachey
Personal finance reporter, BBC News
House prices have started to stabilise in recent months
A year or so ago, Michael Cox was one of a host of Northern Rock customers who received a letter from his lender encouraging him to move his business elsewhere.
Mr Cox, from Oxford, was a couple of years into a five-year fixed-rate deal, with interest of 5.49%, and was steadily paying off his home loan. The nationalised bank, however, was looking to reduce its mortgage book to repay its debt to the government.
This was when customers - irrespective of whether they were at risk of default or, like Mr Cox, low-risk homeowners - were being urged to go to other banks.
Despite seeing better rates offered by other mortgage providers, Mr Cox says he would always have faced a penalty charge from Northern Rock if he moved halfway through his mortgage deal.
"I would have moved if I could, but there is nothing else out there that would cost me less if you include paying the penalty charge, so I am stuck," he says.
"If they reduced the penalty charge, I would be gone."
The policy at Northern Rock has changed since those letters were sent out. The nationalised bank is lending again - expecting to offer £4bn of new money this year.
But many customers, notably those in negative equity, remain reluctantly stuck with the lender.
More people have fallen into arrears with their home loans
Northern Rock's finances are being poisoned by the continuing fall in house prices and economic recession, which means it has to cover the cost of people potentially defaulting on loans and these properties being repossessed and sold at a loss.
An increasing proportion of the old loans are going bad. The rate at which mortgage customers are missing payments is rising.
At 3.92%, the proportion of the Rock's mortgage customers who are three months or more behind with the payments is higher than the national average of 2.39%.
It is also up on the Rock's figure at the end of December of 2.92% and much greater than, for example, Barclays, which reported earlier in the week that 1.16% of its customers were in the same position.
The Rock's troubles are based around its somewhat notorious Together mortgages, when customers took out home loans with little or no deposit, coupled with an unsecured loan.
People overstretched themselves during the boom and now face problems making payments at a time when job losses are rising or wages are frozen.
However, the Rock says it is finding ways of helping people who get into difficulty to stay in their homes, such as the bank in effect becoming a landlord, to which the occupier pays rent.
In the detail of the Rock's results, published on Tuesday, is another statistic that will worry many homeowners.
The proportion of customers in negative equity - when the value of a home is less than the amount owed on a mortgage - has risen from 33% at the end of 2008 to 39% now.
Those who suffered a similar fate in the early 1990s might feel a rising sense of panic, but the situation is very different today.
With interest rates still very low, the Rock points out that these mortgages remain affordable for many people.
It means householders are not handing back the keys in their droves. They are staying and still paying. But it does mean that some might find themselves stuck where they are living.
This is an issue for those who might need to move house because they are changing jobs, who want to move in with somebody, who need more room for the children or who are getting divorced.
House prices have dropped and until they recover and start to rise again, the negative equity rate is unlikely to improve. The longer prices continue to fall, the longer homeowners will be in negative equity.
In fact, the National Audit Office estimated earlier this year that if house prices dropped by 10% over the year, half of the Rock's mortgage customers would be in negative equity.
This outlook will be of more concern if interest rates start to rise again. It also has a key part to play in the future of Northern Rock and how quickly it returns to the private sector.
Northern Rock was nationalised in February 2008
In the Rock's results is a £602m charge for "loan loss impairment". In other words, some of this is the loss Northern Rock faces for selling repossessed homes in a flat housing market.
A good chunk of it - £316m - comes from unsecured loans, such as the top-up loans on the Together mortgages.
It also includes expected future losses. So if more homes are repossessed and the value of these homes continues to fall, the losses suffered by the Rock will be even more grim.
That, in turn, might delay any sale of the Rock, or increase the number of bad loans the taxpayer has to absorb.
Meanwhile, the amount of money coming into the Rock from savers' deposits is falling.
The banking crisis pushed many worried savers into placing their funds with institutions with a government guarantee that their money was safe, such as nationalised Northern Rock and state-backed National Savings and Investments.
The Rock's results show that this trend has reversed. Deposits increased from £14.2bn at the end of June last year, ahead of the epicentre of the banking crisis, to £19.6bn at the end of the year.
This had fallen again to £18.4bn at the end of June this year, no doubt as more confident savers chased better interest rates elsewhere.
So while the Rock's mortgage customers might feel stuck, its savers are rather more mobile.