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AHF lends further £25m at low rate
Government-backed borrowing aggregator Affordable Housing Finance (AHF) has lent £25m to a Midlands housing association.
The interest on the loan to 33,000-home Midland Heart is the closest to the low London Interbank Offered Rate (LIBOR) of any loan from AHF’s European Investment Bank (EIB) II facility to date.
Midland Heart – whose chief executive Ruth Cooke is set to lead the UK’s largest housing association, Clarion, from April – borrowed the money at a floating rate, meaning the interest rate is tied to an external benchmark.
In this case, the six-month deal was struck at 0.14% more expensive than LIBOR – the rate at which banks borrow from each other. This was the lowest LIBOR margin achieved using money from the funds provided by the EIB, a historic source of cheap borrowing for housing associations.
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It was also the second-lowest LIBOR margin achieved under the government scheme to underwrite loans to housing associations, after a 2015 loan to Notting Hill Housing, which received £50m at 0.12% more expensive than LIBOR.
AHF can still access its European facility as the funds have already been granted, but associations could find it harder to borrow from the investment bank after the UK leaves the European Union.
Loans guaranteed by the government under the scheme have almost run out, but £8bn of government-guaranteed loans announced in the Autumn Budget could – the Treasury told Inside Housing in November – be used for affordable housing.
Piers Williamson, chief executive of AHF, said: “It’s incredibly rewarding to see that AHF has continued to deliver competitive financing opportunities right till the end of its underwriting period.
“This latest pricing for Midland Heart gives yet more evidence that the [Affordable Homes Guarantee Scheme] has been the most successful scheme of its type.”
