Post Office and other lenders accused of window-dressing wit

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Post Office and other lenders accused of window-dressing with 90% mortgages

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Mortgage lenders including the Post Office have been accused of seeming to offer home loans to borrowers with small deposits.

In practice most applicants are turned down and little money is lent on advertised terms, it is alleged by rival lenders and mortgage brokers.

Borrowers with deposits of 15 per cent or less have been virtually barred from the housing market since the credit crunch, despite repeated calls by the Government for lenders to help this group of mainly first-time buyers.

Mortgages: The Post Office denied any suggestion that its low-deposit deals were 'fake'

The Post Office, whose mortgage arm is backed by the stricken Bank of Ireland, has consistently offered attractive rates with deposits as little as ten per cent.

It has best-buy fixed rates over two, three and five years where homebuyers can borrow up to 90 per cent. But it is secretive about how much it lends on these deals and how many applicants it turns down.

As the loans are available only direct, rather than via brokers, there is no external data on lending volumes. Other lenders, such as the Yorkshire Building Society, also restrict their best low-deposit mortgages to customers who apply direct. It declined to produce take-up figures.

The Post Office denied any suggestion that its low-deposit deals were ‘window-dressing’ or ‘fake’ and told Financial Mail it was committed to growing its mortgage business.

It said four in ten successful applicants were first-time buyers borrowing 85 per cent to 90 per cent of the property price.

Overall lending figures paint a gloomier picture. In the second quarter just 1.5 per cent of lending was to borrowers with a five to ten per cent deposit, down from 9.3 per cent in 2007.