A new and unexpected player has entered the mortgage market, as supermarket group Tesco announced recently that they would be offering mortgages via Tesco Bank.
Customers taking advantage of the deals on offer will have to put up at least a 20% deposit, but Tesco Clubcard holders are given the opportunity to earn loyalty card points as they make their monthly repayments.
‘Its opening rates would have been competitive a month ago,’ commented Ray Boulger of John Charcol mortgage brokers, who seemed unenthusiastic about the 3.19% to 5.09% interest rates on offer. By comparison, a number of lenders have begun offering less than 3% interest on their fixed-rate, long-term mortgages.
Boulger went on to say that ‘Any hopes that the entry of Tesco would provide a significant increase in competition have been dashed, at least initially, by its opening rates, which seem designed more to avoid getting too much business than to ruffle the feathers of existing lenders.’
Andrew Montlake, of mortgage brokers Coreco, was more positive, noting that ‘The products themselves are priced sensibly, with the opportunity to repay 20% of the loan amount off each year without penalty a nice extra.’
Tesco Bank Will Offer Mortgages - BBC News