You are here: Home -

Perenna given banking licence with restrictions from FCA and PRA

by:
  • 16/08/2022
  • 0
Long-term fixed rate lender Perenna has received its banking licence with restrictions from the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA), so it will soon be able to offer 30-year fixed rate mortgages.

The lender is now an authorised bank but needs to confirm that its banking infrastructure is in place and restrictions lifted before it can offer long-term fixed rate mortgages.

Perenna uses a bank funding model based on the covered bond market, rather than short-term savings or deposits. A covered bond is a portfolio of loans issued by a bank then sold to a financial institution for resale.

The lender said the model would boost growth by “stimulating investment and increasing systemic stability”.

It added that the business model would be a “catalyst to resolve the UK’s productive finance challenge” as the covered bond market would channel “trillions of pounds of insurance and pension monies into the UK real economy” by improving domestic capital markets.

The lender added that its long-term funding model could allow the UK to develop an “efficient and scalable green mortgage market”. It explained that as the payments are fixed for 30 years or more, consumers would “immediately see the benefit of home retrofits”.

Long-term fixed rates have risen up the agenda in recent months in light of interest rate rises, inflation and increasing short-term mortgage rates.

Several lenders have started offering longer-term fixed rates of 30 years or more, including Molo, Habito, Kensington Mortgages and Landbay.

Perenna said that the UK government, Bank of England and the Tony Blair Institute are among the commentators who have mooted the benefits of long-term fixed rate mortgages, as it could provide more financial stability and help more first-time buyers.

Arjan Verbeek, CEO and founder of Perenna, said: “It is very exciting to be a bank that is authorised with restrictions, and it is a major milestone for the team. The UK financial infrastructure requires significant innovation to get growth back and reduce inequality.

“Perenna will be the blueprint to deliver this, for mortgages as well as SME and infrastructure. Perenna will support consumers with buying their first homes, moving home, supporting themselves in retirement, and help the transition to net zero.”

He added: “Perenna looks forward to working with other initiatives to increase private sector investment into the real economy addressing the structural challenges we face.”

The lender started seeking its lending authorisations from the regulator in 2019, with plans to launch later that year but this was delayed.

Perenna’s Colin Bell also hinted last year that mortgage brokers that advise on 30-year fixed rate deal could be paid repeat commission for carrying out regular reviews.

Related Posts

Tags

There are 0 Comment(s)

You may also be interested in