Will Foreign Lenders Kick Start Home Loans? Don't Bank on It; FINANCE
Byline: Neil Simpson
The jury is out on whether the high-profile arrival of a group of foreign banks will kick-start Britain's mortgage market.
Last week it was revealed that Bank of China - the world's third biggest bank - was following in the footsteps of Israel's Bank Leumi and Sweden's Handelsbanken with a pilot operation offering mortgages to British homeowners.
'New entrants to the market are always welcome if they increase competition and boost the amount of loans available to UK buyers,' says Mark Harris, of broker Savills Private Finance. But he remains uncertain whether the recent arrivals will ever be more than niche players.
Bank of China has hit the headlines for its tracker deal, where you start out paying three per cent. The fee, originally due to be [pounds sterling]888, as the number eight is associated with good luck in China, is now a more mainstream [pounds sterling]995.
Brokers agree the rate is good but say it can be beaten by similar trackers from the likes of Alliance & Leicester, First Direct, HSBC and NatWest. Holland's ING Direct also has a two-year tracker at 2.99 per cent for up to 75 per cent loan-to-value.
While all five of these lenders - and the vast majority of others in the UK - will offer loans by phone or even online as well as through branches, Bank of China is taking a more traditional approach. …