Hedging deals allow the associations to fix the interest rate on a loan for a set number of years, increasing the predictability of interest payments.
David Cassidy, relationship director at Barclays, said the bank expected to see a wave of hedging deals in the next few months as finance directors take advantage of low interest rates.
Circle 33’s deal enables it to swap from a variable interest rate to a rate of 5.36% fixed for 25 years. The hedging, on £20m of loans, starts in five years’ time. Nathan Dunton, group treasury manager, said: “This maintains a level of certainty in interest payable.”
Acton is hedging about £60m of debt at a rate of 5%. The deal starts next year and will last 10 years.
Source
Housing Today
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