Victoria Mortgages goes into administration
The effects of the global credit crunch continues to leave a trail of destruction behind in the UK, as a sub-prime mortgage lender has become the latest victim.
Victoria Mortgages announced some weeks ago that it would have to withdraw some of its sub-prime products as a result of the credit crunch that stemmed from the sub-prime sector in the United States. Victoria Mortgages has now revealed that it has gone into administration as a result of escalating costs, and therefore will no longer be funding new loans.
Victoria Mortgages is a specialist lender in the sub-prime market, which specialises in lending to those with problematic credit histories and low credit ratings. It is the sub-prime sector in the United States that has sparked the credit crunch, with rising interest rates resulting in record defaults and foreclosures as homeowners in the sub-prime sector struggle to keep up with repayments.
According to reports Victoria Mortgages is the first British lender to go into administration as a result of the ongoing crisis, and KPMG is said to be dealing with the administration process for the lender. The Financial Services Authority has also stated that completions that were due in the coming days will be dealt with by the nation's biggest sub-prime lender, GMAC-RFC.
Many other lenders in the sub-prime market in the UK have already reacted to the crisis by either removing some of its sub-prime products from the market altogether or by raising interest rates by huge levels. Sub-prime lending accounts for around 8% of all mortgage lending in the UK, but in the United States accounts for a fifth of all mortgage lending.
19th September 2007
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