Where there have been viability issues for some housing associations, the Tenant Services Authority has acted swiftly and decisively to steady the ship.

However, the recession has led to an unprecedented change in borrowing terms and conditions for associations. In spite of the sector’s strong credit history, the cost of new borrowing over a year has, in some cases, become almost 10 times more expensive - although this is still roughly half the cost for equivalent borrowing in the commercial sector.

Earlier this year, Tribal was asked by Inside Housing’s publisher, Ocean Media Group, to research how the social housing sector, which relies on substantial funding from the financial markets to support its development, might look towards 2012.

The housing sector has adjusted its planning processes to account for unfavourable financial conditions and in recent months some stability has returned to the financial markets. With it, there is increasing appetite among lenders for new business, a fall in the level of margin on new loans and an easing in the extent to which lenders are re-negotiating the terms of established loans. In short, things are slowly getting better, so what does this mean for the sector going forward?

In our view, the impact of the banking crisis is likely to be far-reaching with implications for funding towards 2012 and beyond. Financial regulators have reviewed the amount of reserves banks must set against potential losses on loans. The cost of this is being particularly felt in the pricing of long-term loans, which historically have dominated financing for housing associations.

We are seeing a trend towards shorter, more conventional banking maturities of five, seven and 10 years which means social housing providers may have to accept an increased cost of a loan when they come to renew it. We are also seeing differential pricing according to maturity - something that has never been a significant feature of lending to the sector.

Balancing this, the past few months have seen greatly increased interest from long-term investors, such as pension funds, and there are indications that this may lead to direct investment in social housing from some of the larger institutions.

This means that the capital markets could become the provider of long-term capital for housing, while the banking sector becomes the source of shorter-term debt.

The trend towards shorter maturities with higher margins could encourage new lenders who were deterred in the past by long-term borrowing and very low margins.

The dawn of a potential new era in the way financial institutions lend to housing will require a shift in the sector’s approach to financial planning, but these adjustments should be rewarded with more opportunity to fund the sector’s growth to 2012 and beyond.

David Mairs is director of treasury services at Tribal

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