Post Office enters home mortgage market
The Post Office has announced a new tracker mortgage which it hopes will propel it into the top ten lenders in the UK.
The Post Office is set to increase competition in the home mortgage market by launching a tracker deal to rival major lenders.The loan tracks the Bank of England base rate plus 3.09 per cent, which means customers can take advantage of the current low-interest environment with a total rate of 3.59 per cent.
Hoping to become one of the top ten mortgage lenders in the UK, the government-owned postal service plans to offer £3 billion of home loan financing to homeowners before the end of 2010.
The move will be funded by the Bank of Ireland, which was the eighth biggest mortgage lender in the UK last year until credit crunch troubles plagued the firm.
According to the Times, it will join Tesco Bank and Virgin Money in attempting to gain some market share in the home mortgage industry, which could add some healthy competition.
Ray Boulger, senior technical manager of independent mortgage broker John Charcol, told the newspaper: "There are at least two or three major lenders planning to enter the market in the next year, but it will depend largely on the state of the wholesale money markets.
"When Tesco arrive in the market it will herald a further shake-up."
Nationwide also announced some new discounts on its tracker mortgages to make it easier for first-time buyers to secure a deal without hefty upfront costs.
The mortgage lender is offering those new to the property ladder £500 off any reservation fees on its three, four and five-year fixed-rate or three-year tracker products.
Written by Rosie May
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