UK Post Office to become ‘people’s bank’
The UK Government has today outlined further plans for the Post Office to become a ‘people’s bank’ after injecting a further £180m funding into the project, on top of the £1.7bn already invested, reports Home Move. The article continues:
The Post Office Bank, led by business secretary Lord Peter Mandelson, will create a ‘People’s Bank’ and will see 11,500 Post Office outlets as the backbone of a new national bank, which is set to encourage saving and provide credit for those on low incomes.
According to the Government, the plans will turn the Post Office into “a leading player in financial services” and is expected to be a core part in its election manifesto.
However, as part of its expansion within the financial services industry, the Post Office is set to offer a new mortgage product with a 90% loan-to-value (LTV) ratio, which is targeted at first-time buyers.
The news will be a welcome boost for first-time buyers who have been struggling since the onset of the credit crunch to get a foot on the property ladder, as without at least a 25% deposit, they have been unable to secure a mortgage.
According to many housing experts, first-time buyers are a major part of the housing market and the lack of first-time buyers “delay any prospect of a meaningful market recovery”.
The mortgage, which will require a 10% deposit, is part of the Government’s plans to considerably increase the amount that the Post Office lends, and the target is to double the value of its mortgage book in the coming financial year.
Lord Mandelson said the number of financial services offered by the Post Office would start to expand over the coming year and as well as increasing its mortgage offering, the Government said the Post Office will introduce a weekly budgeting account, aimed at helping those on a low income to manage their household budgets.
Furthermore, a children’s savings account is due to be launched within the next year, while it will also try to encourage low-paid workers to save by contributing 50p for every £1 saved in a new Saving Gateway account.
