Post Office UK Ltd to sell mortgages
The Post Office today announced that it is to start selling mortgages.
A range of home loans backed by Bristol & West, the Bank of Ireland’s UK lending arm, will initially go on offer at post office branches in the North East from this week, before being rolled out across the UK.
The move comes as dozens of mainstream mortgage lenders are scaling back their mortgage business to reduce risk in the wake of the global credit crunch.
The Post Office, which claims to be the fastest growing financial services provider in the UK with more than one million savings, loan, insurance and credit card customers, hopes to capitalise on the complexity of existing deals offered on the high street by offering simpler loans without hidden charges, but said that it would apply strict lending criteria to the three loans in its new range that will exclude some borrowers.
It will offer one standard three-year fixed rate loan of 6.09 per cent up to 95 per cent of the property’s value, a 6.35 per cent buy-to-let mortgage up to 85 per cent and a self-certification loan for self-employed borrowers of 6.44 per cent on up to 90 per cent. All of the loans come with an arrangement fee of GBP 399.
Brokers welcomed increased competition from the Post Office’s new venture, but said that the loans were not the most competitive on the market.
Melanie Bien, of Savills Private Finance, the mortgage broker, said: “The Post Office is not renowned for the most competitive financial products and unfortunately these mortgages bear this out. The low arrangement fee – GBP 399 – on all products is welcome and transparent but not much help if the rates are high, which they are.”
Post Office director of lending Gary Fitton said: “We believe there is a real need for straightforward mortgage products, which don’t entice customers with headline grabbing rates and then penalise them with huge fees. This is why we have developed products with good initial and long-term value.”
