B&B buys up a new tranche of home loans

Published on Friday 28 November 2003 00:00

BRADFORD & Bingley today said it has bought another chunk of GMAC-RFC’s mortgage book for around £440 million.

The deal is the third under an agreement by B&B, which was announced in April this year, to acquire 1.05 billion of home loans from the lending arm of United States car giant General Motors.

Previous acquisitions were made in May and July, for 260m and 151m respectively.

Today’s purchase, which has been funded from the company’s existing resources, has been made by B&B’s wholly-owned subsidiary Mortgage Express.

The latest loan portfolio purchase will increase the group’s managed assets, which stood at 29.4bn on June 30, by around 1.5 per cent. All the loans are secured on residential property in the UK.

As well as reviewing the credit controls GMAC-RFC used in building up the loans, Mortgage Express tested the book using its own scoring process to confirm it met B&B’s credit standards.

The acquired mortgages are around 52 per cent buy-to-let, 33 per cent self-certified, and the rest are standard mortgages.

The book has an average loan size of 119,000 and an average loan to value of 74 per cent.

Before agreeing to buy 1.05bn of mortgages from GMAC-RFC, B&B acquired a 650m loan portfolio from the group in September last year. This was followed by a further purchase in March for a total of 470m.

GMAC-RFC recently became the 13th largest mortgage provider in the UK, advancing 3.36bn in mortgage loans in 2002, an increase of more than 80 per cent, despite the market overall growing just 36 per cent.

First-half profits for B&B fell 1.9 per cent to 132.4m, weighed down by a weaker performance at its estate agent business and flagging sales of investment products.

But the figures still beat analysts’ expectations, and the drag on profits was partially offset by record net lending of 2.6bn.

B&B’s loan portfolio stood at 23.1bn on June 30, of which 81 per cent was secured on residential property.