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.

Tom Smith
19th September 2007

Recent News:

• Top End London Prices Affected By City Turmoil [19.09.07]
  A warning has come that high end London house prices could be affected by the financial crisis that has hit world markets. City bonuses are likely to be cut after the credit crunch has had an adverse impact on so many financial firms.
  
• Mortgage Rates On Way Up Again [19.09.07]
  As mortgage providers start to raise their rates again, there was a warning from the governor of the Bank of England Mervyn King that the cost of borrowing would probably rise, whichever way the Bank moved its official base rate.
  
• Loan Industry Not Cleaned Up As Debt Numbers Increase [17.09.07]
  A revamped Consumer Credit Act was designed to clean up the loan industry, creating a fairer, cleaner marketplace for borrowers, and stamp out loan sharks. Sadly, consumers are still reporting appalling stories of aggressive phone calls, harassment and poor service by loan companies.
  
• Buy-to-let Investors Hit By Mortgage Increases [17.09.07]
  Global stock market turmoil over the past few weeks is now forecast to hit thousands of buy-to-let investors as mortgage lenders are set to increase rates.
  
• Mortgages Look Set To Rise [14.09.07]
  Experts are predicting that mortgage rates are going to go up again as a direct result of the recent turbulence that has overcome global financial markets.
• Exorbitant Fees For Debt Advice [13.09.07]
  Borrowers struggling with mortgage repayments are being hit by new fees. Exorbitant charges are being levied on borrowers asking for advice about handling debt by various top banks.