Tesco Bank exits mortgage market

Tesco Bank exits mortgage market

Tesco Bank has ceased new mortgage lending and is actively looking to sell its existing mortgage portfolio, the bank announced today (May 21).

The lender, which has offered mortgages since 2012, serves more than 23,000 customers and has a £3.7bn loan book.

A sale of its portfolio would include the complete transfer of related balances and ongoing administration on relevant accounts, but the bank stated there was no certainty a sale would result from its search for a buyer.

Gerry Mallon, chief executive of 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.

"To that end, we have made the strategic decision to focus on serving a broader range of customers in more specific areas, which means moving away from our mortgage offer. 

"Our priority in any sale, is to complete a commercially acceptable transaction with a purchaser who will continue to serve our customers well."

The sale process will remain confidential until a transaction is confirmed and the bank said there would be no changes to customer accounts as a result of the lender’s exit from the mortgage market.

Last year, Tesco reported a drop in profits for the first half of the year after it absorbed the cost of a £16.4m fine imposed by the Financial Conduct Authority.

In January lender Fleet Mortgages pulled its entire product range with immediate effect due to a funding shortfall but announced its return to the mortgage market last month (April 9).

Secure Trust Bank also stated it would pull the plug on new mortgage lending in February of this year due to the current economic climate, increased competition and pressures on the housing market.

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