Mortgage lender goes into administration
March 5, 2008
According to a recent report Victoria Mortgages, which is a specialist lenders in the sub-prime sector, has had to go into administration as a result of escalating debts. The UK has seen turmoil hit the financial markets following a credit crunch that was sparked by high bad debt levels in the sub-prime mortgage sector in the United States. Victoria Mortgages appears to have become one of the casualties of this situation, and officials have confirmed that the company will no longer be funding new loans.
There have been many other lenders that have been affected by the credit crunch, with inter-bank lending rates shooting up, making the situation all the more problematic. A number of lenders have had to raise their interest rates on sub-prime mortgages and others have withdrawn some of their sub-prime products from the market altogether. In the UK sub-prime mortgages make up around 8% of total mortgages. The situation has hit hardest in the United States, where sub-prime mortgages account for around 20% of all mortgages.
Victoria Mortgages is thought to be the first British mortgage lender to go into administration as a result of this credit crunch. The biggest sub-prime lender in the UK, GMAC-RFC, took over any loans that were due for completion at the time the company went into administration. The crisis in the financial sectors means that Victoria Mortgages may not be the only major casualty, and all lenders are currently exercising caution when it comes to lending, particularly to sub-prime applicants.
Lenders are being particularly stringent at the moment when it comes to lending and therefore potential buyers may struggle when it comes to purchasing a property, particularly if their credit is less than perfect.
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