Digital bank Perenna says it has received its banking licence today (16 August) and plans to offer customers fixed-rate 30-year mortgages.

The fintech firm says it has been granted a banking licence with restrictions from the Prudential Regulation Authority and the Financial Conduct Authority, adding that once its banking infrastructure is in place it will begin selling long-dated fixed-rate mortgages as well as a complete suite of home loans.

It says the UK is in the middle of a “housing crisis” that would benefit from “long-term fixed rate mortgage market can provide to UK financial stability and UK consumers, specifically supporting first-time buyers onto the housing ladder”.

Lenders typically provide mortgages with fixed rates of up to 10 years, with the most popular products lasting two and five years.

In the past, the business says housing-focused financial institutions have helped bring economic stability to countries around the world, such as Fannie Mae and Freddie Mac in the US following the Great Depression, and Pfandbrief banks in Germany in the aftermath of the Second World War.

It adds that the UK government, the Bank of England, and the Tony Blair Institute for Global Change have all identified the stability a long-term fixed rate mortgage market can bring.

The firm says its business model will help channel “trillions of pounds of insurance and pension monies” in the covered bond market into the UK real economy and improve domestic capital markets.

The business was co-founded by former BNP Paribas bankers Arjan Verbeek and Hamish Peacocke, as well as former Interbay chief executive Colin Bell.

Perenna chief executive Verbeek says: “The UK financial infrastructure requires significant innovation to get growth back and reduce inequality.

“Perenna will be the blueprint to deliver this, for mortgages as well as small business and infrastructure. Perenna will support consumers with buying their first homes, moving home, supporting themselves in retirement, and help the transition to net zero.”