Tesco Bank makes long-awaited move into mortgages
Tesco Bank has made its long-awaited entry into the mortgage market but has no plans to offer its products through intermediaries.
From 6 August it launches a range of two, three and five-year fixed rate mortgages and two-year trackers up to a maximum loan to value of 80 per cent.
Rates start at 3.19 per cent for two-year fixed rate up to 70 per cent LTV, 3.69 per cent for a three-year fixed rate up to 70 per cent LTV and 3.89 per cent for a five year fixed rate up to 70 per cent LTV. Tesco’s two-year tracker starts at base rate plus 2.69 per. The lender offers a product fee-free option, which saves the borrower an £800 fee but makes the rate dearer.
Up to 75 per cent LTV, the lender charges 3.59 per cent for a two-year fixed rate, 3.99 per cent for a three-year fixed rate and 4.19 per cent for a five-year fixed rate, while it charges base rate plus 2.89 per cent for a two-year tracker.
Up to 80 per cent LTV, it charges 3.99 per cent for a two-year fixed rate, 4.39 per cent for a three-year fixed rate and 4.69 per cent for a five-year fixed rate, while it charges base rate plus 3.49 per cent for a two-year tracker.
Customers opting for a tracker mortgage can move to a fixed rate at any time.
Tesco Clubcard holders will collect one point for every £4 they repay on their mortgage each month.
The products are only available online or via the telephone. A spokeswoman confirmed the lender has no current plans to offer its products through intermediaries.
Tesco Bank had originally planned to launch into the mortgage market in the summer of 2011 but its entry was delayed by IT problems.
Tesco Bank chief executive Benny Higgins says: “The launch of Tesco Bank mortgages is a major milestone towards offering Tesco customers a full retail banking service.”
Coreco director Andrew Montlake, says: “I still remain concerned that with the market in such a state of flux, another lender offering a non-advised mortgage process is not ultimately in the best interests of a majority of borrowers.”
In June, Marks & Spencer announced it was gearing up to launch a chain of banks which will include a mortgage offering.