What Tesco’s Exit From Mortgages Means For You
22nd May 2019
Tesco has announced it’s stopped offering new mortgages and is looking at selling its existing mortgage portfolio.
The supermarket chain has been in the mortgage market for seven years and has more than 23,000 borrowers who owe a total of £3.7 billion on their homes.
Why Tesco's exiting mortgages
Gerry Mallon, who heads up Tesco Bank, said: ‘‘In recent years, challenging market conditions have limited profitable growth opportunities. Our focus is on how we best serve Tesco customers and align our resources effectively to their needs while ensuring that our offer remains sustainable in the long term.’’
In other words, Tesco haven’t found a profitable way to compete in the busy mortgage market.
Dilpreet Bhagrath, Mortgage Expert at Trussle, says that several factors have made things difficult for Tesco.
“As Tesco's criteria was quite strict compared to other lenders, borrowers with adverse credit or unusual circumstances often looked elsewhere. Coupled with tighter regulations in the mortgage market, and the growing popularity of app-based banks, Tesco has lost its foothold in the mortgage market.
Tesco Bank has a small proportion of the market, and while the loss of any lender reduces consumer choice, there’s unlikely to be much of an effect on the range of deals available, she says.
The impact on Tesco customers
If you’ve got a mortgage with Tesco, your rate and terms will stay the same. And if you’ve just had a mortgage application approved, the bank will honour it.
If Tesco sells its mortgage portfolio, they’ll be in touch to explain what the sale means for your account.
If you were considering applying for a Tesco mortgage, you’ll have to look elsewhere as the lender isn’t taking on new applications.
What Trussle’s doing to help
If we helped you get a mortgage with Tesco, or you’ve had one approved through us, we’ll be in touch to answer your questions.
If it’s higher than Tesco’s, you could be paying significantly more for your mortgage if you don’t switch before the deal ends.
So it’s worth thinking about remortgaging before your current deal ends to avoid going onto a potentially even higher SVR.
What to do if your lender sells your mortgage
There’s no need to worry if your bank or building society sells your mortgage. In fact, it’s much more common than you think. Some people even forget who their current mortgage lender is.
The terms of your loan are protected by law, so they won’t change. And the new owner of the loan must let you know about the transfer as soon as the details are known.
If it happens to you, it’s worth checking whether you’re coming towards the end of your fixed-rate mortgage, though. Your payments may be affected by an even higher SVR.