With the current mortgage rates, every new solution available for the customers is welcomed by the market. No wonder Perenna succeeded. Let\u2019s explore the topic of this fintech and see why users trust the company with something so sensitive as a mortgage.<\/p>\n\n\n\n\n\n\n\n
Perenna<\/a><\/b> is a London-based fintech that provides mortgages against a promise to pay a fixed monthly payment over a period of time. The mortgages are financed by issuing covered bonds on the London Stock Exchange (instead of savings deposits). This allows the company to offer flexible and long-term fixed-rate mortgages that shield customers from fluid and rising interest rates.<\/p>\n\n\n\n The company\u2019s name itself comes from ancient Latin. It\u2019s derived from the term \u201cperennis\u201d which means \u201ceternal\u201d or \u201crecurring\u201d. Taking that name, the company wants to describe itself as the body carrying the meaning of continuance.<\/p>\n\n\n\n Perenna was founded by Arjan Verbeek. Originally from the Netherlands, Arjan moved to London in 1993 after obtaining a master\u2019s degree in econometrics from Tilburg University.<\/p>\n\n\n\n The company was started to create a structural solution to structural issues in the mortgage market in the UK. Verbeek saw that consumers were asked by the companies how big of a debt they could take. That\u2019s speculation and it\u2019s not fair to lenders because it\u2019s based on factors that are usually hard to predict.<\/p>\n\n\n\n Furthermore, they are based on the assumption that nothing will change in the future and that the person or persons taking a loan will sail smoothly with the credit under the roof. As we all know, that rarely happens.<\/p>\n\n\n\n That\u2019s how Perenna was born; from the notion that clean mortgage rules contribute to a happy home ownership. And that will contribute to a happier society, where consumers can live a balanced, debt-manageable life. <\/p>\n\n\n\n While the UK largely uses short-term deposits to fund lending like mortgages, Danish mortgage banks use covered bonds which are match-funded to mortgages. That\u2019s where the idea came from, the Danish system is just more nuanced and forthcoming toward lenders. <\/p>\n\n\n\n At the end of 2020, Perenna submitted an application to become the first UK-covered bond bank with a business model based on an innovative business model. Since then, the company has been given a banking license to operate on the UK market.<\/p>\n\n\n\n Perenna\u2019s product protects customers from rising interest rates by providing certainty in their mortgage rate for 20 or 30 years with an Early Repayment Charge (ERC) period of five years.<\/p>\n\n\n\n The business proposition is here taken to investors who are seeking long-term and stable income. Like pension funds and insurance companies. By relying on issuing covered bonds, Perenna is able to turn a profit while shielding consumers from foul market play. Coming, according to Verbeek, from the portion of the market controlled by just a few giant brands.<\/p>\n\n\n\n Perenna\u2019s proposition is created by a funding model that relies on issuing covered bonds to investors seeking long-term stable income, such as pension funds and insurance companies. Perenna offers mortgage and retrofit options, as well as remortgage, deposit unlocks, and other features.<\/p>\n\n\n\n Covered bonds enable banks to fix the mortgage interest rates over long terms, like 30 years. Perenna believes that fixing the interest rate removes risk from consumers and provides control over their monthly mortgage payments. Verbeek thinks that consumers should not be exposed to the uncertainty of interest rate changes.<\/p>\n\n\n\n Homeowners who took short-term fixed-rate mortgages can and probably will experience significant hardship when their fixed terms end. In addition, aspiring homeowners struggle to obtain the right product on the market. This chaos is not welcomed in stable markets, where all players (companies and lenders) have an equal standing over the mortgage.<\/p>\n\n\n\n Lenders in countries with long-term fixed-rate mortgages, like the United States or Denmark, can continue lending through economic cycles creating stability in the market and ensuring consumer protection.<\/p>\n\n\n\n At Code & Pepper, we believe in fintech products that shape the market they lend on. That\u2019s why we hire only the best developers<\/a><\/b>. Products like Perenna show that the market doesn\u2019t have to squeeze lenders to assure cash flow.<\/p>\n\n\n\n We like to create applications that change the market. Look at our case study list<\/a><\/b> and find a project similar to yours. If it\u2019s not there, then it\u2019s time to create it!<\/p>\n\n\n\n\n\nThe origin story \u2013 who built the company?<\/h2>\n\n\n\n
The business model and revenue streams<\/h2>\n\n\n\n
The consequences of the business model<\/h2>\n\n\n\n
Summary<\/h2>\n\n\n\n