THE body behind failed lendersBradford & Bingley and Northern Rock has repaid almost a quarter of its taxpayer loans, including £1,6 billion in the six months to September 30.

Crossflatts-based UK Asset Resolution said the amount recovered since its formation by the Government in 2010 to be responsible for winding down the mortgage books of the collapsed banks - now stands at £12 billion.

Chief executive Richard Banks said the half year had been 'steady-as-she-goes' with continued good progress. UKAR reduced its balance sheet by another £4.4 billion following £2.8 billion of mortgage redemptions.

Rising house prices and low interest rates encouraged borrowers to look elsewhere for deals, meaning UKAR's mortgage loan book of 503,000 accounts is down from 529,000 a year ago.

It said that 94 per cent of borrowers are up to date with their monthly payments and that those three or more months in arrears reduced by 11 per cent to 13,746. The total value of arrears fell by 13 per cent to £105.2 million.

Mr Banks said:" It is pleasing that arrears continue to fall and we remain committed to working with our customers to help them plan for the future."

UKAR said its administrative expenses for the six months were 12 per cent lower than the equivalent period in 2013/14, down from £95.2million to £83.3million

Underlying profits of £693 million were 17 per cent higher than the comparable period in 2013/14.

The figures exclude the impact of a deal this month to transfer the mortgages of 27,000 customers to a consortium led by US bank JP Morgan. The transaction secured a profit of £55 million after the loans were valued at £2.7 billion.