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First UK victims shut by sub-prime crisis

Three UK mortgage firms are closing as the fallout from the US sub-prime crash spreads.

Victoria Mortgages went into administration this week after being unable to secure funding lines.

Lehman Brothers is closing its London Mortgage Company and Southern Pacific Personal Loans brands and withdrawing from the second-charge sector.

Victoria Mortgages blames disruption in the capital markets for its closure and says it will be unable to complete outstanding offers. The FSA believes that up to 380 customers will be affected although GMAC-RFC has offered to step in to help.

Victoria initially withdrew its sub-prime products at the start of August, claiming it was temporary and it would reprice its products by as much as 2.5 per cent when it relaunched.

Lehman says it will focus on its Southern Pacific Mortgage Limited and Preferred brands. It will look to consolidate some of LMC’s features and its salesforce into the two firms.

The company is undergoing a global restructure that will see 850 job losses, with around 100 redundancies in the UK.

Personal Touch Financial Services sales director Dev Malle says conditions are turning speculation about consolidation into reality. He says: “We have got players being driven to the wall and are going to see more. Unless they have a multi-product range or are a big established name, lenders are going to be forced into a corner. It is going to accelerate consolidation and this will not just be limited to lenders but will also affect brokers and packagers.”

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