Santander says deposits from landlords are up 150 per cent as building slows
Associations bank ‘record’ deposits
Funds deposited with lenders by housing associations have increased significantly in the past year, with Santander reporting deposits at ‘record levels’.
The lender revealed that deposits were up 150 per cent over the past 12 months. Lloyds Banking Group and Barclays confirmed they had also seen a similar trend over the same period, and there was increased activity at RBS, the bank revealed.
Associations are understood to be drawing down loans and depositing them with lenders to make sure they have guaranteed access to the funds.
Paul Stevens, head of housing finance at Santander Corporate Banking, commented: ‘We have had a lot of success in taking deposits from housing associations because many see it as a safe place for surplus funds when a development is delayed.’
Steve Amos, head of the social housing division at Barclays, said one of the reasons deposit balances were higher was because its clients were carrying more liquidity to ‘protect themselves against the unexpected in a more volatile business climate’.
Mark Washer, group finance director at Affinity Sutton, said deposits had increased dramatically because of increased fears that lenders might not deliver on their loan commitments, following the collapse of investment bank Lehmans last year.
He said: ‘We have increased our own deposits 10 to 12 times over what we had previously.’
Mr Washer added that it was a ‘security point’ knowing Affinity could get instant access to funds for its development program instead of relying on the loan facility.
Paul Tyrell, director of housing finance at Royal Bank of Scotland, added: ‘The problems faced by some lenders at the end of last year gave housing associations cause for concern and many decided to deposit cash so that it could be easily accessed rather than relying on drawing down funds from loan agreements.’
Have your say
You must sign in to make a comment
Readers' comments (1)
Harry Lime | 11/12/2009 10:43 am
I find it very hard to believe that the associations can achieve a higher savings interest rate than the interest they would be paying on the loans they've drawn down. It's fairly common knowledge that the HCA funding has gone so why the need to have this money on tap that is costing them money? Assuming there's a 2% differential between loan and savings interest, that's £20,000 per million, per year. If they've drawn down £5m then they're effectively paying £100k of residents money when they know the likelihood of obtaining further grant funding is nil - doesn't sound very prudent to me......
Unsuitable or offensive? Report this comment