New Post Office Mortgage to Shake the Market

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he Post Office intends to expand its financial services market share by reducing the rates on a number of their mortgage products and a recent launch of a two-year mortgage deal at a fixed rate of 2.85%. The new deal, the firm offers may not be suitable for everyone as it is only possible to borrow up to 65% of the house price and an arrangement fee of £1495 is not the cheapest. Nevertheless, this reduction is looking very attractive and is proposed to be a fair solution both for the first time buyers and experienced customers.

A background for the new product is looking positive enough as recent data demonstrates that average mortgage rates have soared to 3.56%. Also, there has been a decrease in the number of mortgages available in the market. Generally, negative forecasts of the UK economy make mortgage lenders reluctant to conclude long-term contracts.

At this stage it is difficult to say whether Post Office’s competitors will follow its example and reduce their rates. However, there are hopes that the Post Office proposal would serve as a trigger to get market back into action.