Barclays to buy Kensington Mortgages as interest rates rise
Barclays is to buy the specialist mortgage lender Kensington Mortgages for £2.3bn, in a dash for mortgage books as interest rates rise.
The acquisition comes at a time of intense competition in the mortgage market, and as rising interest rates provide a boost to lenders.
Kensington is being sold by its private equity owners, Blackstone and Sixth Street. The sale comes after an auction process that attracted interest from a number of bidders.
Kensington focuses on the self-employed and those with variable incomes, segments that leading banks often do not serve. Its customers include first-time buyers, older borrowers and people with multiple sources of income. The business, which is based in Maidenhead and has about 600 employees, services approximately £8.7bn of third-party mortgages in addition to its own mortgage portfolio.
Barclays said the final price would depend on the size of Kensington’s mortgage portfolio at the time the deal completed. The bank estimates it will comprise about £2bn worth of home loans by the anticipated December completion date.
Jefferies analyst Joseph Dickerson said: “We think this transaction will add capabilities for Barclays in specialist mortgages and will be accretive to the UK business.”
UK house prices have continued to rise in the past few months despite the worsening cost of living crisis, but industry experts expect the market to cool later this year. Interest rates have been climbing as the Bank of England tries to tackle soaring inflation, which hit a 40-year high of 9.1% in May. The central bank lifted rates by a quarter point to 1.25% last week, and is expected to raise borrowing costs further in the coming months.
The Barclays deal is the latest as banks race to buy up mortgage books.
Read more on theguardian.com
