The building society will get more transfer opportunities, with Wrexham and Rhondda Cynon Taf councils also considering the move.
Principality will probably bid for future transfers as part of a syndicate. Commercial lending manager Gary Price said: "Our likely partner would be a building society which had a similar partnership approach."
With an almost £80m commitment, Principality is one of the UK's smallest social housing lenders – but it has a reputation for competitive bidding on smaller deals to Welsh housing associations.
The society was founded in 1860. Its team is headed by Peter Hughes and includes commercial lending managers Gary Price and Ian Bailey and support managers, Mark Doubler and Karene Vicek.
Chief executive Peter Griffiths, appointed in March 2002, is said to have put greater emphasis on social housing lending.
and Principality has picked up the pace of its work in the area.
Principality's customers say its future success will depend on competitive pricing and administration.
Price, who leads the team, has been at the society since 1981 and is behind the majority of its deals. Hughes and Bailey are both former NatWest while Doubler used to work for Bank of Wales.