Leeds Building Society has raised £250m of funding through a covered bond issue, enabling it to increase its mortgage lending.
The 10-year long-term funding was raised through a covered bond backed by residential mortgages.
Ian Ward, chief executive of Leeds, says other financial busi-nesses will also start to look at the covered bond market to raise funds.
He says: “This issue has the potential to be the forerunner of more of its type as firms seek longterm wholesale funding.”
In recent months the society has raised a further £250m of wholesale funding for between three and five years, through private placements and other arrangements.
Ward says: “Having secured most of our long-term funding re-quirements for 2010/11, we are now well placed to increase our resi-dential mortgage lending.”
Alan Cleary, managing director of Precise Mortgages, says: “It’s good news to see more funding in the market. Societies have in the past issued a lot of covered bonds and hopefully we will see more.”
Meanwhile, Leeds launched a shared ownership deal last week with a maximum LTV of 75% and maximum borrower share of 95% LTV at 5.99%.