Tesco Bank has become the latest lender to pull out of the mortgage market.
The supermarket bank will stop offering mortgage deals to new customers with immediate effect. It also confirmed it is looking for a buyer for its existing mortgage portfolio.
Tesco said this strategic review was the result of more challenging conditions in the mortgage market.
Tesco Bank chief executive Gerry Mallon says: “In recent years these market conditions have limited profitable growth opportunities.” He adds that the bank wants to focus on products where the offer “remains sustainable in the long term”.
Tesco Bank started offering mortgages to customers in 2012. It currently has over 23,000 mortgage customers, with total lending balances of £3.7bn.
Tesco Bank initially only sold direct, but has been lending via the intermediary channel since 2016.
Tesco Bank is not the only lender to exit the mortgage market in recent months.
AA Mortgages stopped offering loans to new customers in March, citing difficult trading conditions. The lender blamed a “highly competitive market” for its withdrawal, but did not rule out offering mortgage deals in future, should conditions change.
Since the start of the year specialist lenders Magellan Homeloans, Secure Trust Bank and Amicus Finance have all stopped writing new business.
Many blamed high street lenders for offering more competitive deals to higher risk borrowers, effectively undercutting margins in more niche lending markets. Funding costs have also increased for many providers.