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Belmont Green’s £350m securitisation opens door for Vida’s return

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  • 15/07/2020
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Belmont Green’s £350m securitisation opens door for Vida’s return
Belmont Green, trading as Vida Homeloans, has raised a £350m securitisation, its first since the start of the Covid 19 pandemic.

 

The transaction should hasten Vida Homeloans return to the market after it was forced to stop lending during the coronavirus crisis.

The new deal, led by Barclays, JP Morgan, NatWest Markets and Santander, is the fifth residential mortgage backed securitisation (RMBS) transaction for Belmont Green.

The specialist lender said the transaction, Tower Bridge Funding 2020-1, saw significant appetite from investors.

The trade included a number of structural features, designed to mitigate any investor concerns over the impact of the pandemic.

AAA notes sold at 137 basis points over SONIA (Sterling Overnight Index Average), comparing favourably to Belmont Green’s Tower Bridge Funding No.4 securitisation in June 2019, which was priced only 10 basis points lower that the latest deal, the lender said.

Anth Mooney (pictured), chief executive, Belmont Green, said: “Covid-19 has had an unprecedented impact on the UK mortgage market. The virus and the subsequent lockdown effectively closed the securitisation markets, so our deal can be seen as an important staging post in the recovery of market confidence.

“Our responsibility as a specialist lender at this time is to help people with what are real life circumstances. Vida Homeloans can now look forward and refocus on the vital role it plays in supporting Britain’s many underserved borrowers, from key workers to single parents to the self-employed.”

 

Lack of funding support

In June, Kensington Mortgages completed a securitisation deal which the lender said would allow it to expand its product range and reduce some of the pricing on its deals.

Vida Homeloans temporarily stopped taking in any new mortgage business on 25 March, having pulled some of its products from sale a week earlier.

Vida cited a lack of access to liquidity facilities offered by the Treasury and the Bank of England to help lenders support borrowers who are financially affected by the pandemic.

Specialist non-bank lenders have been particularly hard hit since the coronavirus crisis began with several stopping lending as capital markets closed down and government and regulators enforced mortgage payment holidays for borrowers.

HM Treasury and the Bank of England have been in discussions with trade bodies about designing a scheme for non-bank lenders to support their funding models.

Giving evidence to the Treasury Select Committee of MPs in April, UK Finance CEO Stephen Jones explained that non-bank lenders financed through bank lines and then into securitisation structures were suffering.

He said: “Those funding structures are not working at the moment because the underlying markets are not working.

“And we are in very detailed discussions with Treasury and the Bank of England to try and design a scheme that will enable those incredibly important credit transmission mechanisms, often to underserved segments of the consumer and SME markets, to be able to be continue to operate.”

However, nothing has been published yet.

 

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