Bank of China pilots buy-to-let mortgages in the UK

Tuesday, 28 July 2009 06:54

Mortgages from the Bank of China are soon to be made available in the UK.

Deals are to be sold initially via four brokers and start from 2.5 per cent over the base rate.

Bank of China has previously only focussed on Chinese communities in the UK, but it is widening its net.

Asian banks have stood up more firmly against the credit crisis, and the move by Bank of China could start more foreign banks coming into the British market.

Currently UK mortgage lending is about half the level it was a year ago.

Data from moneysupermarket show there are now just 2,177 mortgages on the market. The average best two-year fix is 4.03 per cent.

However, Bank of China is to maintain a very conservative attitude with its expansion into the UK market. Applicants will have to have an interview in person for the loan to go ahead.

Mark Harris, at brokers Savills Private Finance which is one of the four signed up to sell the deals, said: "It is a return to old fashioned principles of finance."

Deals will be repayment mortgages only.

Mr Harris explained the initial deals were part of a pilot.

"They are just dipping their toes into the market," he said.

Keshav Thukaram, managing director of Smartlandlord.co.uk, said: "This is an exciting new development.

"Although the Bank of China is currently lending on a limited scale, every little helps."

He added the bank's cautious approach to buy-to-let lending should lead the way for other lenders in what it still considered a risky sector.

"The Bank of China's new lending also demonstrates confidence in the UK housing market. Contrary to media reports, the private rented sector is buoyant, although the availability of property finance is a serious restriction at the moment," he said.

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