Tesco’s banking unit is withdrawing from the mortgage market, blaming “challenging market conditions”.
Tesco Bank started offering mortgages in 2012 and currently has more than 23,000 customers who have total lending balances of £3.7bn.
However, the company will now cease new mortgage lending with it actively looking for ways to sell its existing portfolio.
Gerry Mallon, Chief Executive 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. We have therefore chosen to cease lending to new customers and announce our intention to explore a sale of our portfolio.”
When they entered the financial service sectors a few years ago, the supermarkets were seen as potential challengers to the dominance of the major High Street banks. However, strict regulation in the mortgage market, and the emergence of other app-based banks, has diluted the appeal of the sector at a time when the supermarkets are struggling to grow their core grocery businesses.
