Tell us a bit about your career to date and how you came to be chief executive of Perenna?
I’m from the Netherlands and moved to London in 1993 on a student exchange programme. A year later I started my career in financial services as a graduate trainee at Royal Bank of Canada.
At Moody’s, where I worked with several Danish mortgage banks, I saw how stable and resilient the system was. I then moved to Barclays and to BNP Paribas just before the financial crisis, structuring mortgage finance programmes for lenders around the globe.
Brokers need to realise that LTFRMs provide good outcomes, with more certainty than short-term products
The crisis made me compare and contrast mortgage markets across the world, and I realised that the structure of the mortgage market had a much larger impact on the health of an economy and stability of a system than people understood.
The markets with long-term fixed-rate mortgages (LTFRMs), funded with long-term savings, fared much better than the UK did. I realised that many of the issues in the UK were worse because of our structure.
This is why I, with a few likeminded industry veterans, embarked on the Perenna project.
How have consumers and the mortgage market received the launch of Perenna?
Our feedback from consumers is very encouraging. They understand the value of fixed payments for term. The Perenna products have been designed to give the consumer what they want, which has been well received.
The best advice was a warning: the project is sound but to change an entire market for the better you need perseverance and time
The mortgage market is adjusting slowly but steadily. Brokers are realising that LTFRMs will increase their business volumes.
What do you believe has prevented UK lenders from offering longer-term mortgages?
Governments have tried. The market is controlled by a small number of large lenders with a funding model unsuited to introducing the flexibility that consumers want. But this will change, and we are showing the way.
First, the Consumer Duty is focusing on good outcomes, and there are plenty of examples that show that short-term fixed-rate loans have caused harm.
I realised that many of the issues in the UK were worse because of our structure
Second, the mortgage market is shrinking and lenders are looking for growth. New products like LTFRMs are the solution — growing the market by helping first-time buyers, and assisting people to borrow into retirement.
Are terms up to 50 years in your plans?
The benefits of homeownership for health and wealth are immense. To achieve this, people need to borrow a large amount because property prices are very high compared to incomes. Lengthening the term allows for the higher loan amount and reduces the monthly payment.
The market knows only short-term mortgages. To change the hearts and minds of people, we need brokers
We offer a range of terms, from 15 years to 40 years. We have no plans to venture up to 50 years because there is no need. Should it arise, we will consider it.
What do brokers need to know to help clients who are considering these products?
Brokers need to realise that LTFRMs provide good outcomes, with more certainty than short-term products. LTFRMs enable people to purchase the home they want, and sooner. Unlike short-term products that place market risk onto borrowers and exacerbate the risk of negative equity, LTFRMs protect borrowers and livelihoods.
The mortgage market is shrinking and lenders are looking for growth. New products like LTFRMs are the solution
Why are brokers vital to the products’ success?
To help resolve the housing crisis we need to reform the mortgage market and offer more products.
The market knows only short-term mortgages. To change the hearts and minds of people, we need brokers. They are the touchpoint to consumers, showing them the quickest way to homeownership, which is what LTFRMs provide in a low-risk manner.
What is the best advice you’ve received?
Leaving a well-paid job and starting Perenna was a big step. People were telling me the standard, uninformed things: we just need to build more houses; UK borrowers do not want LTFRMs; it has been tried and it didn’t work. This made me think carefully and triple check everything.
I realised that the structure of the mortgage market had a much larger impact on the health of an economy and stability of a system than people understood
Outlining the thesis to strategy departments at the big banks, which could not fault the project, gave me a lot of confidence.
The best advice was a warning: the project is sound but to change an entire market for the better you need perseverance and time, particularly in a mortgage market that has seen no change for decades.
Company profile
Year established: 2018
Headcount: <100
Address: 20 Eastbourne Terrace, London W2 6LA
Website: perenna.com
Putting customers’ needs at its heart, Perenna’s mortgage allows people to borrow up to six times their income, and fix their rate for up to 40 years — no new deals, no rising rates, no price shocks. Perenna is on a mission to create a nation of happy homeowners.
This article featured in the February 2024 edition of MS.
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