Mortgage applicants with poor credit stranded as Victoria falls

The credit crisis has claimed its first UK lender. Victoria Mortgages has gone into administration due to cash-flow problems.

The company, which specialises in lending to people with poor credit histories, stopped advancing new loans several weeks ago. However, there are thought to be between 300 and 400 people who have had their mortgage applications approved but have yet to receive funds. In effect, these loans are now frozen.

Customers who already have their loans will continue to make repayments as before as Victoria has sold its existing mortgage liabilities on to other banks and financial institutions.

Victoria was established in 2005 and is a sub-prime lender. According to the company's website, it requires "no explanation" of an individual's "adverse" credit position before considering them for funding.

The collapse of the sub-prime lending market in the US has sparked a full-scale credit crisis which now threatens banks around the globe.

Some analysts argue that the British sub-prime sector will not go the way of the American one. They say this is because UK lenders have been more choosy about who they lend to than their US counterparts. But Victoria's demise is bound to shake confidence in this theory.