Beat burden of interest with pooled borrowing, RSLs told

The organisation’s chief executive Ross Fraser told Housing Today’s efficiency conference that large savings could be made by borrowing jointly because associations spent significant amounts paying interest on loans. Interest payments account for about one-third of some associations’ expenditure, Fraser said.

He added that one association had saved £250,000 a year by pooling its borrowing with others.

“Pooling borrowing is one of the motives behind mergers – paying interest is such a large area of expenditure and it’s a good opportunity to refinance existing loans,” Fraser said.

Mike Wilkins, chief executive of DuCane Housing Association and chair of the G320 group of London’s small housing associations, said it was already working with financial institutions on a model for such borrowing. Lenders not already active in the market were particularly keen to get involved.

Bob Wilson, head of finance policy at the National Housing Federation, said pooling could potentially open up the bond market for housing associations.