British subprime specialist Victoria Mortgages has become the latest victim of the credit crisis, as the lender said it had gone into administration and was no longer funding new loans after its costs escalated.
Like many other mortgage lenders in Britain's 'sub prime sector', Victoria depended on the wholesale market to fund mortgages, but recent turmoil has dried up liquidity there, pushing up the cost of borrowing for lenders like Victoria.
The firm, which industry experts say is the first British lender to go into administration in the current crisis, is one of the smaller players in Britain's niche subprime mortgage market.
The Financial Services Authority, which put Victoria's share of the British mortgage market at 0.06%, said KPMG have been appointed as administrators for the wholesale lender
The regulator said GMAC-RFC, Britain's largest subprime mortgage lender, had offered to review potential completions for home purchase deals due in the coming days, with a view to providing borrowers with a mortgage loan.
Backed by US venture capital group Venturion Capital, Victoria was launched just over two years ago.
Following a model popular across the sector, Victoria originated mortgages then pooled them and sold them on to larger financial institutions.
Britain's subprime mortgage market is far smaller and more recent than its US counterpart. Subprime loans accounted for around 8% of British lending in 2006 but 20% of US lending.
