Perenna, a leading mortgage provider, has announced that its restrictions have been lifted by the Prudential Regulation Authority and Financial Conduct Authority. This enables the company to offer fixed-rate mortgages in the UK.
Unlike other countries such as the US and some European countries, the UK market is primarily dominated by variable and short-term fixed rate products. This exposes mortgage holders to higher interest rate risks as loans re-price in a high-rate environment.
In the UK, borrowers have a limited choice of mortgage products, resulting in them having to speculate on their largest debt. This is not the case in other countries where borrowers have a wider range of options.
Perenna’s unique funding model relies on issuing covered bonds to investors seeking long-term stable income, such as pension funds and insurance companies. This allows the company to develop innovative products to address structural problems in the mortgage market for various types of homeowners, including first-time buyers, second steppers, and later-life homeowners.
Arjan Verbeek, CEO & Co-Founder of Perenna, expressed his enthusiasm for introducing much-needed structural change to the UK market, stating that in other countries, billions of pounds of pension savings are invested in the real economy using covered bonds. Verbeek believes that their funding model and banking license will enable them to do the same in the UK, thereby unlocking the housing market, which is a crucial part of GDP.
Colin Bell, COO & Co-Founder of Perenna, shared the company’s mission of creating a nation of happy homeowners. He expressed excitement about offering flexible products to consumers who have been underserved for too long. Perenna’s products aim to improve affordability, provide certainty of monthly payments, and offer flexibility through low early repayment charges. Bell emphasized that their goal is to allow people to focus on their lives without worrying about their mortgage product.
Perenna’s first step in their mission is to offer mortgages to eligible borrowers who are currently on their mailing list. The team is confident that these developments will contribute to the improvement of the UK mortgage market as a whole.
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