US Credit Crunch Claims First UK Victim

While they may not be  the largest or widely known of the sub-prime mortgages companies in the UK, the collapse today of Victoria Mortgages may just be the start of a domino like effect in the UK sub-prime market.  The group is part of US giant Venturion Capital, yet despite a £500 million mortgage loan portfolio, the group has been placed into administration after credit lines dried up.

Its is believed that UK giants Barclays Capital and UBS were two of the main credit providers to withdraw their funding, which then preceded the collapse of the group.  This is certain to increase nervousness in the UK market and we will no doubt see further casualties over the next few days, weeks and months.

There were those in the UK who had hoped that the credit crunch caused by US problems would float over the UK, without any major difficulties - this now seems certain not to be the case.  It will be interesting to see how the UK stock market reacts tomorrow, with the situation now on the UK doorstep.  Should we expect any emergency funding from the Bank of England? Will further credit lines be withdrawn by commercial lenders?

Time will tell, but this issues has along long way to run yet……