Starling Bank enters buy-to-let mortgage lending with £50m takeover of Fleet Mortgages

Just months after rumours that Starling Bank had become a takeover target, now flush with cash and on the back of record results the digital bank has turned from target into acquirer.

Yesterday Starling confirmed its £50m acquisition of specialist buy-to-let mortgage lender Fleet Mortgages, also marking its first entry into the property lending sector.

Fleet, which has experienced zero credit losses since 2014, has c.£1.75bn worth of mortgages under management.

“The acquisition of Fleet Mortgages is the start of our move into mortgages as an asset class and builds on a number of forward-flow arrangements that we’re doing with leading non-bank lenders,” said Starling CEO and founder Anne Boden, a nod to the bank’s work over the past year funding lending via Funding Circle and Zopa.

Going forward Starling Bank will become the sole funder of Fleet’s mortgages, with the lender able to tap into the bank’s growing deposit base.

Fleet’s existing management team, including CEO Bob Young, will remain in place with no changes to the group’s day-to-day operations including its brand.

“We’re buying Fleet because it is very good at what it does, not because we want to change it,” added Boden.

Starling indicated that this is just the start of a wider plan to expand the bank’s lending this year through strategic arrangements, organic lending and M&A.

“2021 is set to become our best year yet with new mortgage loans running at £800m and half-year pre-tax profits of £4m,” said Fleet’s Young.

“Starling Bank will take over all of our funding, allowing us to focus on achieving our significant and ambitious lending and growth targets.”