Post Office to double mortgage book and offer 90% LTV
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Business Secretary Lord Mandelson has today announced a major expansion of the financial services offered by the Post Office, which will include a new range of mortgages.
The Post Office will offer a new mortgage product with a 90% LTV aimed at first-time buyers.
It will also increase its lending substantially, aiming to double the value of its mortgage book in the financial year 2010/11.
At the moment it has not given any more details about the product, but says it wants to target those on low incomes.
As part of Labour’s election campaign Mandelson plans to inject £180m of new government funding for the Post Office in 2011/12 to maintain the network at around its current size.
This goes beyond the £1.7bn that is already being invested between 2007 and 2011.
The Post Office also plans to launch a Saving Gateway account this year. This is a new account for people of working age who are on lower incomes which aims to kick-start the savings habit, with Government adding 50p for every £1 saved.
Mandelson says: “Since the global banking crisis we have set about reinventing the financial services industry piece-by-piece, building a system that is fairer, trusted and more responsible.
“Today is the next step in that process. The Post Office is a well-loved community institution and this move will bring more banking services back to the heart of those communities.”
Pat McFadden, business minister says the Post Office can provide a range of good value, simple financial products for everyone.
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Readers' comments (18)
mic2002 | 29 Mar 2010 10:22 am
As everyone knows,this is Bristol & West under a white label.Yes,to build a fairer system we will offer mostly non-advised products to people on low incomes...how irresponsible is that??
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Danny Lovey | 29 Mar 2010 10:28 am
Yes, Government promote direct non advised sales it should read. If there is one area that should always be advised it is the FTB market
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Anonymous | 29 Mar 2010 10:39 am
At the one end of the scale, we have the FSA aiming ti raise standards in the financial services industry and making changes to the rules so that many hardworking professional intermediaries are forced to quit.
At the other end, we have the government allowing unqualified, inexperienced people to arrange a mortgage up to 90% LTV as if it were a book of stamps!
THIS GOVERNMENTAL AND REGULATORY INCOMPETENCE CANNOT BE ALLOWED TO CONTINUE!
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Anonymous | 29 Mar 2010 10:42 am
Obviously a political move by Mandy. If the Post Office is well loved by the community then why did you close 1000's of branches. People are not stupid. You had 13 years to introduce an account accessible to people on low incomes.Mandy is frantically announcing new plans to appeal to the public in order to gain votes.If Mandy was serious about using the Post Office for Financial Services he would have done this a long time ago and not waited until the network had shrunk to less than half of what it was in its peak time. By his conduct he is now admitting that both he and labour got it wrong and made a mess of it.The govt could have used Girobank to deliver an account accessible to all but it sold it off very cheaply to the Alliance and Leicester now part of SANTA.
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Anthony Dickinson | 29 Mar 2010 10:46 am
Its now Bank Of Ireland who backs the Post Office. Any products like this are a welcome addition in my view. Just because they are direct products does not mean that we cant advise clients on them. We all want the best for our clients after all don't we?
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David Underwood | 29 Mar 2010 10:47 am
As a Mortgage Adviser the first two comments sum up the full and correct response to this announcement.
It is, of course, interesting that rates have not been shown. Currently 90% loan to value deals are VERY expensive at 7%+. The only way that this new 'policy' could be helpful and good advice is if the overall deals were around 5-6% thus forcing other lenders to compete.
But will that happen?
As Northern Rock is a Government institution you are more likely to find a sardine in a baked bean tin!
David
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Anonymous | 29 Mar 2010 10:52 am
Has Mandy thought about brokers?
Who are willing to give good sound advise and
yet this.
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John Lacy | 29 Mar 2010 10:54 am
I think that they are mad to target the lower end of the market as this is where rises in basic commodities hit hardest. I suspect their arrears and repossession figures will reflect this within a couple of years. Bank of Ireland is about to make another bad decision which will lead to more pain for the Irish taxpayers!!
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Anonymous | 29 Mar 2010 11:11 am
Post Office offer a current account? Now there's a novel idea... hang on, didn't they do that a number of years ago?? I believe it was called GIROBANK and was not sucessful financially. Ultimately sold off to A&L - now part of Santander.
Yawn! Surely they can come up with something a little better than that???
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raymond hurst | 29 Mar 2010 11:16 am
Please! Please! can we now have a General Election to stop all these politically motivated statements, in order that a new long term Government can look to help the first time buyers in the UK with consideration of advice from people who really care about HOME purchase for young people and not votes!
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