Mortgage arrears on controversial 125% mortgages are driving up the repossession rate of Northern Rock, according to the company's bosses.

The so called "Together" mortgages account for around one third of the nationalised bank's mortgage book yet make up half of the bank's mortgage arrears and three-quarters of repossessions.

The "Together" mortgages, which were aimed at first-time buyers looking to get on the property ladder, offered loans of up to 125% of a mortgages value and came in for notable criticism when the bank was nationalised earlier this year. More recently, the bank has been slammed for what has been described as an "aggressive" repossessions policy - something denied by the company's Chief Executive Gary Hoffman, despite the Rock's repossession rate going above the national average.

Latest figures showed the proportion of Together mortgage customers in arrears for more than three months stood at 3.1%, whereas the industry average was just 1.33%.

Mr Hoffman said he wanted the bank to lead the way in creating schemes to help people avoid repossessions where customers were having problems with payments but insisted that the bank had to act in the same way as the rest of the industry.

"We want to make sure customers stay in their home. Repossession is a last resort," he said.

Executive chairman Ron Sandler said only 1% of the repayment of the debt to the government (as a result of the February bail-out) was funded by repossessions, so there was no benefit in trying to push up the repossession rate for that purpose.