Starling Bank gets into mortgages: The digital challenger grabs a buy-to-let lender for £ 50 million as part of the expansion offensive
- Starling Bank made its first corporate acquisition and bought fleet mortgages
- It is part of the bank’s expansion drive, which aims to go public by 2023
- Starling has reassured existing fleet customers that it will not change the business
Landlords can now take out a Starling Bank collateralized mortgage backed only by Starling Bank digital after acquiring specialist lender Fleet Mortgages in a £ 50m cash and stock deal.
It is the first corporate acquisition for Starling that has no branches but allows individuals and small businesses to do their banking through a mobile phone app.
Goldman Sachs-backed Challenger bank is expanding, posting revenue of £ 97.6 million last week in the 16 months ended March 31, nearly 600 percent more than last year.
App-based bank Starling will now offer landlord loans after taking over Fleet Mortgages
Its clients have more than doubled to 2.1 million, and deposits have grown from £ 1 billion to £ 5.8 billion. It claims to open a new account every 34 seconds.
Founder Anne Boden said the company was considering an IPO in late 2022 or early 2023.
Fleet Mortgages, based in Hampshire, provides loans to professional and semi-professional landlords that are financed exclusively through intermediaries.
It offers buy-to-let mortgages for homeowners, landlords who operate as limited liability companies and those seeking financing for multi-use homes (HMOs).
It currently manages around £ 1.75 billion in mortgages and will be lending another £ 800 million this year.
For those who already have buy-to-rent mortgages with Fleet, Starling said day-to-day operations “will continue unchanged” with the company’s existing and highly respected management team.
It will operate as an independent company under its existing brand.
A Starling spokesperson told This is Money that Fleet Mortgages may attempt to “refresh” or re-price some products in the near future, although the terms of the existing loans would not change.
Starling will become the sole funder of future loans, with Fleet Mortgages being able to build on its lending business by accessing Starling’s growing deposit base.
Anne Boden, CEO of Starling, said: ‘The acquisition of Fleet Mortgages marks the beginning of our entry into the mortgage asset class and builds on a series of forward flow arrangements that we are entering into with leading non-bank lenders.
‘The existing Fleet management team will remain and Fleet will continue to operate as a stand-alone company, retaining the original name and brand.
“We buy fleet because it is very good at what it does, not because we want to change it.”
Companies in the housing market have become potentially lucrative investments over the past year as buyers flocked to the market, driving prices up more than £ 20,000.
HMRC estimated that 213,120 residential transactions were completed in the United Kingdom in June, the highest amount since statistics began to be collected in 2005.