Post Office 90% LTV mortgages get cool reception from brokers

THE POST OFFICE: CUTS RATES FOR FIFTH TIME THIS YEAR
THE POST OFFICE: CUTS RATES FOR FIFTH TIME THIS YEAR

The Post Office has angered the broker community by launching a range of 90% LTV deals.

The deals are funded through its joint venture with Bank of Ireland, which pulled out of the broker market at the beginning of 2009.

In March business secretary Lord Peter Mandelson announced a significant expansion of the financial services offered by the Post Office, which he said would include 90% LTV mortgages.

It is also offering a range of 85% LTV deals, while rates have been cut across its other mortgages for the fifth time this year.

The Post Office is also introducing a fee-free five-year fixed rate for existing home owners looking to change lender.

Like all Post Office mortgages the 90% LTV deals will be available over the telephone, from Post Office branches and on its website.

The product range includes a two-year fixed rate at 5.45%, a three-year fixed deal at 5.99%, a five-year fixed rate at 5.99% and a tracker at 5.49%.

The Post Office has also cut rates on all its fixed rate mortgages across its existing 75% LTV and 80% LTV ranges, in some cases by 0.36%.
But John Elliot, mortgage and protection adviser at McCrea Financial Services, says: “The intermediary community is not over the moon about this. All the Post Office is doing is white labelling BoI mortgages.

“How can brokers be expected to compete and earn a living given the restrictions put in place against them such as dual pricing, when their own government is propping up the Post Office by letting it supply mortgages from a foreign lender?”

Marco Hughes, director of personal lending at the Post Office, says it is offer-ing a valuable service.

He says: “While there are other 90% LTV deals available in the market many remain out of reach for borrowers because the rates are too high.

“Instead, we are offering affordable rates that give borrowers the chance to take out a mortgage with a smaller deposit. This should help first-time buyers in particular.”

He adds: “The additions to our range and the rate cuts we have made reflect our commitment to offering our customers market-leading rates.”