Starling Bank moves into mortgages: Digital challenger snaps up buy-to-let lender Fleet for £50m as part of expansion drive
- Starling Bank has made its first corporate acquisition, buying Fleet Mortgages
- It is part of the bank’s expansion drive as it targets IPO by 2023
- Starling has reassured existing Fleet customers that it won’t change the business
Landlords can now take out a mortgage backed by digital-only Starling Bank, after it acquired specialist lender Fleet Mortgages in a £50m cash and shares deal.
It is the first corporate acquisition for Starling, which has no branches but allows individuals and small businesses to do their banking through a mobile phone app.
The Goldman Sachs-backed challenger bank is on an expansion drive, and last week reported revenues of £97.6million in the 16 months to March 31 – up almost 600 per cent on the previous year.
The app-based bank, Starling, will now offer landlord loans after it acquired Fleet Mortgages
Its customers more than doubled to reach 2.1million, and deposits grew from £1billion to £5.8billion. It claims to open a new account every 34 seconds.
Founder Anne Boden has said the company is considering a stock market float for late 2022 or early 2023.
Hampshire-based Fleet Mortgages provides loans to professional and semi-professional buy-to-let landlords, exclusively through intermediaries.
It offers buy-to-let mortgages for residential landlords, as well as landlords operating as limited companies and those seeking finance for houses in multiple occupation (HMOs).
It currently has around £1.75billion of mortgages under management and is set to originate a further £800m this year.
For those who already have buy-to-let mortgages with Fleet, Starling said day-to-day operations would ‘continue unchanged with the company’s existing and highly-respected management team’.
It will operate as a stand-alone company under its existing brand.
A Starling spokesperson told This is Money that, while the terms and conditions of existing loans would not change, Fleet Mortgages may look to ‘refresh’ or reprice some products in the near future.
Starling will become the sole funder of future originations, with Fleet Mortgages able to build on its lending operation by accessing Starling’s growing deposit base.
Anne Boden, CEO of Starling, said: ‘The acquisition of Fleet Mortgages is the start of our move into mortgages as an asset class and builds on a number of forward-flow arrangements that we’re doing with leading non-bank lenders.
‘Fleet’s existing management team will remain in place and Fleet will continue to operate as a stand-alone company, keeping the original name and brand.
‘We’re buying Fleet because it is very good at what it does, not because we want to change it.’
Businesses operating in the housing market have become potentially lucrative investments in the past year, as buyers have poured into the market and driven up prices by more than £20,000.
HMRC has estimated that 213,120 residential transactions were finalised in the UK during June, the largest amount since it first started collecting the statistics in 2005.