Tuesday, 23 December 2014

Bank to double exposure and expand loan book to £1bn over next five years

Building society first since 2011 to offer 10-year loans

Yorkshire Building Society is set to be the first sizeable lender since 2011 to offer 10-year loans to social landlords.

The bank also plans to double its annual exposure to the sector as it attempts to attract new clients.

YBS intends to expand its housing association loan book to £1 billion over the next five years. It began lending to the sector in 2009 and has so far lent around £100 million per year.

John Inglesfield, head of social housing at YBS, said its new offering would be ‘quite novel’ for the sector.

‘We are a mutual and we feel comfortable working for not-for-profits,’ he said. ‘Our main membership base is about helping people purchase homes and we see this as a natural extension.’

The lender expects to offer loans of between £5 million and £50 million.

It currently has nine housing association clients across the UK, including Guinness Partnership, Raglan and Sentinel. Mr Inglesfield said he hoped to grow that base and would lend to organisations of any size ‘with robust credit’.

The move comes at a time when most banks offer loans of no more than five years. Clive Barnett, managing director and head of housing finance at Royal Bank of Scotland, said that, ‘as a generalisation’, the bank did not see the need to go beyond five years.

Before the credit crunch, it was common for housing associations to get long-term loans of up to 25 years but that funding stream has largely been replaced by the capital markets in the past two years.

Santander is thought to have been the last major lender to curtail its long-term lending in late 2011.

Gavin Smart, director of policy and practice at the Chartered Institute of Housing, welcomed the building society’s decision. He said: ‘Of course it is good news because what everybody wants is an affordable housing sector that has access to a number of different finance opportunities from as many institutions as possible.’

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