Sainsbury’s Bank has become the latest lender to exit the mortgage market, just six months after Tesco announced that it was pulling out of mortgages.
Sainsbury’s said it would stop offering new mortgages with immediate effect as part of plans to simplify the business and improve margins and cashflow.
According to a recent report in The Daily Telegraph, the supermarket bank’s mortgage business could sell for as much as £1.3bn if a buyer can be found.
Tesco confirmed last month that it had agreed a deal with Lloyds Bank for it to takeover its mortgage book. More than 23,000 residential mortgage customers will see their mortgage moved across to Lloyds’ Halifax division once the deal goes though.
Tough times for lenders
Tesco Bank and Sainsbury’s Bank were both launched in 1997 as challengers to the big high street banks.
Tesco began selling mortgages in 2012, with Sainsbury’s re-entering the mortgage market in 2017, having left it for a period of 12 years to concentrate on selling insurance.
However, recent years have proved difficult for smaller lenders, with low mortgage rates making it much harder to profit from mortgages, and compete with the big banks.
Impact on Sainsbury’s mortgage customers
If you have a mortgage with Sainsbury’s Bank, there’s no need to panic. Your mortgage deal will continue as normal, as even if a bank decides to stop selling new mortgages, it must stick to the terms and conditions of any mortgages already taken out.
Sainsbury’s Bank may now be looking for a new lender to take on its mortgage book, and if it is bought by another lender, they must also agree to keep the terms and conditions of existing mortgages in place.
Whether you’re with Sainsbury’s or a different lender, it’s still a good idea to regularly review your mortgage to make sure you aren’t paying more than you need to.
Low interest rates mean that there are plenty of competitive deals to choose from, with two-year fixed rates starting at less than 1.25% for those looking to borrow less than 60% of the property value.
Sainsbury’s stops mortgage sales