Subprime mortgage lender goes under

Victoria Mortgages, a mortgage provider that specialises in mortgages to subprime borrowers with poor credit histories, yesterday became the first British lender to fall victim to the credit crunch which is currently affecting the world's finance markets.

The company went into administration after their bankers refused to advance them any further funding. When they were forced to close its doors yesterday, Victoria Mortgages was estimated to have business worth £600m on its books and was in the process of handling nearly 400 mortgages applications.

A spokesman for the company said: "This is a line-of-credit funding problem rather than an irresponsible lending problem. This is not anything to do with arrears or repossessions, which were no worse than industry norms. It's about the global credit squeeze and the fact that funding has been withdrawn by the banks, which are generally pulling in their horns."

Victoria Mortgages was a relatively newcomer in the fast-growing subsector of subprime mortgages. It had no savings base and simply borrowed money in the financial markets to then lend to people with poor credit ratings, such as a history of bad debts and CCJs.
In August the company it would withdraw its product due to subprime crash in the US, but claimed it would then launch a new range of mortgages. But they were unable to get new sources o funding. As a result of this, this KPMG was appointed joint administrator of the company.

The FSA sought to calm fears about the impact of Victoria's collapse: "The firm is a small wholesale mortgage lender, which represents about 0.064% of the mortgage lending market. The firm believes that up to 381 customers who have current mortgage offers may be affected."