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Post Office to enter mortgage market with 'good value' loans
The Post Office today announced plans to enter the mortgage market saying it would offer good value home loans that are easy for customers to understand.
The group is trialling the sale of three mortgage products through selected branches in the north of England, an area that has traditionally been the stronghold of troubled bank Northern Rock.
The products being launched are a three-year fixed rate loan with a rate of 6.09%, a fixed rate buy-to-let loan at 6.35% and a self-certification discount loan offering a rate of 6.44%.
The Post Office said the products would have a transparent pricing structure, including a low-cost fixed arrangement fee of GBP399, no higher lending charges for people borrowing a high proportion of their home's value and no hidden charges.
The group, which already offers credit cards, loans, insurance and savings accounts, said as the mortgage market became increasingly complex, it was aiming to provide straightforward mortgages that offered good value both initially and over the long term.
The Post Office is currently the UK's fastest growing financial services provider, with more than one million customers.
The trial will run into next year, after which the Post Office will assess take up levels and customer feedback before deciding whether to roll out the loans further.
Gary Fitton, director of lending at the Post office, said: "We believe there is a real need for straightforward mortgage products, which don't entice customers with headline grabbing rates and then penalise them with huge fees. This is why we have developed products with good initial and long-term value.
"Throughout the duration of the trial we will be assessing whether this belief stands true.
"At the same time we will ensure we provide the products and the service quality expected from the Post Office. A formal evaluation will take place at the end of the trial, which will inform how we proceed."
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