- August 15, 2022
- Posted by: David Spencer
- Category: Financial Services
Barndoor Strategy client Perenna has today received its banking license and is now primed to begin offering 30-year fixed-rate mortgages in the UK.
Over time, it hopes to add mortgages for as long as 50-years.
Its banking license will come into full effect once it has finished building its systems. The lender is aiming to launch its first products within six months. It is also planning to work with challenger banks as distribution partners, allowing them to use its funding platform to issue loans.
The Perenna banking model is the norm in Denmark where Fixed-For-Life mortgages are funded through covered bonds placed with pension funds and insurance companies. The lender manages credit risk and passes the market risk to the bond investors.
Arjan Verbeek, chief executive and founder of Perenna, said longer-term rates should help borrowers during the cost-of-living crisis and in an environment of rising interest rates.
“Rates are going up and if you have a household budget to manage, you need to know what you’re paying on your mortgage every month,” Verbeek said. “With inflation running high, this will take a chunk of the stress out.
“Mortgages are broken in the UK because normal people can’t buy a house. This is not the case in other markets, such as the US and Denmark, where stability is being provided by long-term mortgages.”