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A housing association in Northern Ireland has drawn down a loan from the European Investment Bank (EIB) at an interest rate of less than 1.7%.
Apex, which is based in Derry and owns around 5,500 homes, has taken out a £24m loan with a 23-year maturity. It forms part of a £130m facility agreed in 2017.
TradeRisks, which acted as advisor on the transaction, claimed the fixed rate of 1.696% was one of the lowest in the housing sector for a long-term loan.
According to the Northern Ireland Federation of Housing Associations’ global accounts, the average interest rate for private sector borrowing in 2018/19 was 3.5%.
Apex will repay the money in quarterly constant annuities, starting in January 2020 and ending in January 2042.
The EIB is a not-for-profit investment arm owned by the European Union.
It has promised to honour all its existing commitments to UK organisations, but deals need to be appraised, with this process taking significantly longer since the EU referendum in June 2016.
Housing associations have found the EIB to be the cheapest source of funding in recent years, but the bank is not expected to continue to back UK social housing at scale after the country has left the EU.
Wheatley Group, which owns around 80,000 homes in Scotland, drew down the first tranche of an £185m loan with the EIB at an interest rate of under 1.5% in October.
Roderick Canning, director of finance at Apex, said: “Apex is delighted to have secured this exceptionally low rate of long-term finance, one of the lowest secured in the UK housing sector.
“This deal, supported by the European Investment Bank, allows us to continue to invest in new build social housing dwellings in areas of very high need in Northern Ireland.”
Antoine Pesenti, senior managing director at TradeRisks, said: “We are thrilled to be the arranger on a long-term funding solution that supports Apex’s strategy to deliver more affordable homes at a fixed rate below 1.7%, one of the lowest fixed rates in the sector.”