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Home buying deal

New bank plans 30-year fixed mortgage

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Bank plans a longer term deal with home buyers (pic: Terry Murden)

A new bank is planning to issue 30-year fixed-rate mortgages when it signs up its first borrowers in October.

Perenna, which is seeking a banking licence from the Prudential Regulation Authority, has secured $10 million of start-up finance and said it has a target of lending £100 million a month.

It says will offer its 30 year deal up to 95% loan-to-value with flexibility to change after five years with no redemption charge.

Its mortgages will be financed through long term covered bonds similar to the way public funding is raised – meaning it can fix rates for exceptionally long terms.

Most fixed-rate mortgages in the UK are short term, but longer terms are common in other countries, such as Denmark.

Perenna said that it would need to raise tens of millions of pounds in equity capital, probably from venture capital groups, once the PRA determines its minimum capital needs.

The bank was cofounded by former BNP Paribas bankers Arjan Verbeek and Arjan Verbeek, together with Colin Bellm, formerly of Interbay.

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