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The Morgan Stanley-owned specialist lender will leave the market following the completion of its last outstanding mortgage offer and it does not expect to operate again.

Mark Clarke, outgoing chief executive of Advantage, said: "I would like to thank all our borrowers, intermediaries, suppliers and employees who have been part of this journey in the last three years. I wish them all the best for the future."

Advantage scaled back its residential mortgage operation in February, citing poor market conditions and making 160 members of staff redundant.

Morgan Stanley said at the time it was scaling back its residential mortgage operation in the UK because of the continued deterioration of the mortgage market.

Previous reports said Morgan Stanley was looking to sell the business and if a buyer was not found it planned to close the business making all employees redundant.

Keith Dearling, founder and former managing director of Advantage, announced a few weeks ago he was joining Debt Free Direct to launch an adviser proposition.

Mr Dearling set up Advantage as a packager in 1991. The business then became a sub-prime and non-conforming mortgage lender after it was bought by investment bank Morgan Stanley in 2005.

It launched its own range of products, ADV, funded by Morgan Stanley, and developed a direct to lender website.

Mr Dearling said the news was "disappointing but consistent with the market unfortunately how it is at the moment."

Peter O'Donovan, mortgage adviser for London-based IFA Bestinvest, said while the news was not a surprise his concerns lay with the advisers who work in the sector and may face further difficulty finding products for their clients.

He said: "It is unfortunate for the lenders and for the people that work there but we are seeing all these lenders that are pulling back are struggling to find backers to lend anymore. They have probably made the right move in pulling out totally.

"A while ago this announcement would have been a bit of a shock but it seems to be accepted now that some lenders will not come back, which is a big shame."

However, Mr O'Donovan said with less lenders in the market it meant there would be more business to share between the remaining lenders.

He said: "So those that are thinking about pulling the plug might get some relief."

From 16 June onwards any business enquiries related to Advantage should be made to Richard Wilson at richard.wilson@adv-elect.co.uk.