The firm secured a banking licence with restrictions in August last year and received over £100m in enquiries the following day.
The latest approval will allow Perenna to bring its long-term fixed rate mortgage to the UK, with its flagship product allowing customers to secure a mortgage rate for 20 to 30 years whilst still having flexibility with early repayment charges (ERCs) only in place for the first five years.
The lender said it would initially offer mortgages to people on its waitlist and then open up to the wider public later this year. It noted that currently there were around 5,000 on its waitlist to date.
Perenna uses a covered bond funding model as opposed to 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 company said this “long-term stable income” would allow the business to “develop a range of innovative products aimed at addressing structural problems in the mortgage market for first time buyers, second steppers and later life homeowners”.
Perenna continued that short-term fixed rates and variable products are dominate in the UK market, leading mortgaged households to be more exposed to rising rates and first-time buyers struggling to get on the ladder.
It noted that long-term fixed rates could reduce the exposure to rising rates and make mortgages more affordable for first-time buyers.
Arjan Verbeek (pictured), CEO and co-founder of Perenna, said: “We’re introducing much needed structural change to the UK. In other countries, billions of pounds of pension savings are channelled into the real economy using covered bonds.
“Together, our unique funding model and banking licence will enable us to do exactly the same in the UK and unlock the housing market, an important part of GDP.”
Colin Bell, chief operating officer and co-founder at Perenna, added: “Our mission is to create a nation of happy homeowners. We’re excited to offer our flexible products to consumers who, for too long, have been left underserved.
“Our product offers improved affordability, certainty of monthly payments, and flexibility through low ERCs. We want people to get on with their life and not worry about their mortgage product.”
James Browne, senior policy adviser, Tony Blair Institute for Global Change, continued: “Long-term fixed rate mortgages free borrowers from the interest-rate risk that has now materialised, and since there is no risk of repayments increasing, it is safe for homeowners to borrow more. This could unlock homeownership for many prospective first-time buyers.”
