New bank, Perenna, has secured its unrestricted banking licence from the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA).

It is the first UK start-up to secure an unrestricted bank licence in 2023.

The approval marks a key milestone for Perenna, allowing it to introduce its long-term fixed rate mortgage products to the UK. Perenna’s flagship product will enable customers to have certainty in their mortgage rate for 20 or 30 years whilst benefitting from the flexibility provided by an Early Repayment Charge (ERC) period of just five years.

The proposition is created by a funding model which relies on issuing covered bonds to investors seeking long-term stable income, such as pension funds and insurance companies. It will enable the business to develop a range of products aimed at addressing structural problems in the mortgage market for first time buyers, second steppers and later life homeowners.

Initially, Perenna will offer its mortgages to people on its waitlist, and then the wider public later this year.

Arjan Verbeek, CEO & co-founder, Perenna, said: “We’re introducing much needed structural change to the UK. In other countries, billions of pounds of pension savings are channelled into the real economy using covered bonds.

“Together, our unique funding model and banking licence will enable us to do exactly the same in the UK and unlock the housing market, an important part of GDP.”

Colin Bell, COO & co-founder, Perenna, added: “Our mission is to create a nation of happy homeowners . We’re excited to offer our flexible products to consumers who, for too long, have been left underserved. Our product offers improved affordability, certainty of monthly payments, and flexibility through low ERCs. We want people to get on with their life and not worry about their mortgage product.”