Post office launches mortgage deals

The Post Office today increased its assault on the mortgage market with the launch of a range of deals for first-time buyers.

The group is offering four mortgages for people with only a 10% deposit, two of which are best buys.

It also introduced a new range of mortgages for people borrowing 85% of their home's value, all of which offer market leading rates.

Interest rates on its existing fixed rate mortgage range were also reduced for the fifth time this year, with the group cutting them by up to 0.36%, while it is also offering a range of fee-free five-year fixed rate loans for people remortgaging.

The group, which is run as a joint venture between the Post Office and the Bank of Ireland, recently announced plans for a major expansion in the financial products it offers.

The push will also see it "significantly increase" its mortgage lending, with the Government saying it hopes the group will double the size of its mortgage book during the coming financial year.

The Post Office advanced £1 billion during 2009, giving it a market share of between 3% and 5%. It currently offers more than 40 different mortgages.

Marco Hughes, Post Office director of personal lending, said: "Whilst there are existing 90% deals available, many remain out of reach for most borrowers because the rates are too high.

"The latest additions to our range and the further rate cuts reflect our commitment to offer our customers market leading rates."

The group is offering a rate of 5.45% on its two-year fixed rate mortgage for people with only a 10% deposit and 5.99% on its five-year one. Both deals come with a £999 arrangement fee.

Rates for people with an 85% loan to value ratio who pay a £999 fee start at 4.29% for a two-year fixed rate deal, while those with a 25% deposit will be charged interest of 4.78% on the new fee-free five-year fixed rate mortgage.

Barclays' lending arm the Woolwich is also reducing rates on its three-year and five-year fixed rate mortgages for people with a 20% deposit by up to 0.5%.

The move will leave rates on both mortgages, which come with a £999 fee, at 5.49%.