AHF prices £50m of cheap European Investment Bank loans

Affordable Housing Finance (AHF) – the government’s delivery partner under the £3.5bn Affordable Homes Guarantee Programme (AHGP) – is providing the remaining loans from its agreed facility with the EIB. The loans have an average life of 20 years.

The latest deal saw the pricing of a £25m floating rate loan on Tuesday (13 February 2018) for Midland Heart at 14 basis points over the 6 Month LIBOR rate.

That represents the lowest LIBOR margin achieved under the current EIB facility and the second lowest under the AHGP. Notting Hill Housing took a £50m loan at just 12 basis points over LIBOR in 2015. Midland Heart, which manages over 33,000 homes, will use the finance to help fund “a significant number” of affordable homes.

Earlier this week, AHF priced two 30-year amortising loans, totalling £25m.
Adactus, which manages 13,000 homes in the North West, is taking £15m at a fixed rate of 2.088 per cent. The price was fixed this week but the HA plans to draw down the money in March.

Merlin Housing Society took £10m at a fixed rate of 2.098 per cent. Merlin, which provides community care to over 18,000 people and manages over 8,000 homes, is in merger talks with Bromford. The pair plan to deliver 300 new properties per year.

Piers Williamson, AHF’s chief executive, said over 30,000 units have been built under the scheme and that “these latest transactions show how cost-effective AHF’s EIB facility is”.

“It’s incredibly rewarding to see that AHF has continued to deliver competitive financing opportunities right till the end of its underwriting period. This latest pricing for Midland Heart gives yet more evidence that the AHGP has been the most successful scheme of its type.”

He said the focus is now turning to whether HAs will have access to any of the £8bn of housing guarantees announced by Philip Hammond at the autumn budget 2017 – and what the EIB’s stance will be to lending in the UK should there be continued benefit of a guarantee after the UK leaves the EU.