Tesco Bank says it has no plans to lend above 80 per cent loan-to-value as it believes there is little demand for higher LTV products among its customer base.
In an interview with Money Marketing, Tesco Bank managing director David McCreadie (pictured) says he sees no demand for high LTV mortgage products after conducting research with its customer base prior to the launch of its mortgage range.
The lender launched today with a range of two, three and five-year fixed rates, and a range of two-year trackers, with a maximum LTV of 80 per cent. Tesco Bank planned to launch into the mortgage market in the summer of 2011 but its entry was delayed by IT problems.
McCreadie says: “We have no intentions of launching anything other than what we have in our launch range. That may evolve over time but we have certainly got no firm plans and no dates fixed when we may look to expand any product feature or any customer feature. Our core focus is going to be on the majority of Tesco customers.
“The reality is in the market there was only two per cent of all lending over 95 per cent LTV in the first half of this year so the majority of Tesco customers are not looking for anything in excess of 95 per cent LTV.”
“There are no plans at this stage to do anything above 80 per cent.”
Chadney Bulgin mortgage partner says Jonathan Clarke: “The reason there was only such a small amount of lending in that market is because there are virtually no providers. If there were some more competitive 90 to 95 per cent mortgages available I think they would represent a more significant part of the market. I hope Tesco Bank tires to plug that gap at some point.”
McCreadie says Tesco has no plans to offer its products through brokers, however the lender may be forced to offer an advised service if the FSA implements its proposed ban on non-advised sales as part of the mortgage market review.
McCreadie says: “Clearly, there is the MMR so if there are any implications from that that require a change in operating model we will need to review at that stage.”
Some commentators have accused the launch of being unadventurous as the lender’s rates are not as competitive as some of its rivals.
McCreadie says: “The reality for our rates is that you do not have to have a 40 per cent deposit, you are not paying the highest fees in the market and you do not have to have your main bank relationship with Tesco Bank to access our products.”