A Merseyside housing association has saved £15m by fixing the interest rates on its loans.
Knowsley Housing Trust fixed rates on £98m of its £180m loans last month. It will now pay 5-5.5% interest instead of the 7% predicted in its business plan.

The deals will save it £15m over the 30 years covered by the plan.

The extra money will be used to complete the trust's £300m improvement programme two years earlier than originally planned.

Bob Taylor, the trust's deputy chief executive, said: "When we transferred [from Knowsley council] we promised to deliver over eight years. All the savings we have made mean we can deliver in six."

The programme, which will refurbish the trust's 17,000 homes, is funded by the £180m loans and £120m of rent income. However, Taylor said he "wouldn't rule out" further borrowing.

The trust also finished syndicating its loans between four lenders last month. Royal Bank of Canada lent £45m, Abbey National £75m and Barclays and Derbyshire Building Society each lent £30m.

Other associations are also taking advantage of current low interest rates to fix their loans. The Council of Mortgage Lenders has predicted that base rates will go up 0.5% by the end of next year, a rise that would cost the sector £70m (HT 29 August, page 14).

Source

Housing Today