Tesco Bank exits ‘challenging conditions’ of UK mortgage market

Tesco Bank said today that it has decided to cease making new home loans, with chief executive Gerry Mallon blaming “challenging market conditions.”

As recently as February, Tesco Bank was cutting fees on its home loans and offering borrowers new incentives such as £750 cashback deals as part of a long held strategy of chasing growth to challenge more established home lenders.

The aim of seriously challenging high street banks saw former chief executive Benny Higgins a expand the lender’s mortgage business three years ago by offering home loans via independent brokers.

Explaining Tesco Bank’s decision to now abandon its position in the market, current CEO Mr Mallon said: “In recent years, challenging market conditions have limited profitable growth opportunities.”

He added: “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.” He also moved to reassure Tesco’s existing mortgage borrowers by saying “our priority in any sale” of the loan book “is to complete a commercially acceptable transaction with a purchaser who will continue to serve our customers well.”