The Post Office may not be a name that leaps to mind when you consider shopping for a home loan and yet it is making headlines again by reducing the rates of its buy to let mortgages by 0.8%. It has also reduced the interest rates on fixed rate and tracker deals and launched a new 2 year fixed rate deal for anyone able to put down a hefty deposit of up to 35%.
These changes come into immediate effect as the Post Office attempts to become an effective competitor in the UK mortgage market. Marco Hughes, the director of personal lending, says they are constantly striving to offer customers a good choice coupled with excellent value for money. Home buyers can now benefit from the Post Office’s lowest ever fixed rate contractor mortgage, he added.
That news could make you believe that the housing market is starting to show signs of improvement, but the deputy governor of the Bank of England, Charles Bean, suggested at the weekend that the Bank might step in and restrict mortgage lending.
Deposits of between 10% and 25% would become the norm for property buyers and the Bank might even set mortgage interest rates. The idea being to stabilise both the property market and the economy by controlling the amount of risk the banks are allowed to take.
But will this approach work? We live in a free market economy and as such introducing restrictive practices and regulations could prove to be a dangerous move.
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Image: new low rate by TheTruthAbout
