Tesco now targets the home loan market
Britain's most successful supermarket chain will start selling home loans from Monday. It's the latest move in Tesco's planned challenge on traditional high-street banks.
Interestingly the new mortgage range from Tesco is less than stunning, meaning you won't see their deals at the top of the best buy tables. But with lots of Clubcard points on offer, it's likely to prove a hit with loyal customers, which is presumably what the supermarket is hoping.
"The rates are reasonably priced, if not market leading," said David Hollingsworth of the broker London & Country. He said the pick of the bunch is a two-year fixed rate at 3.19 per cent for those with a 30 per cent deposit. However it's beaten by a 2.95 per cent deal from West Bromwich BS. Meanwhile Tesco's five-year fix at 3.89 per cent is considerably more expensive than Nationwide's 3.39 per cent offering.
"We're trying to satisfy customer needs by offering good value," said David McCreadie, banking chief at Tesco.
The bank has 6.5 million savings, loan and credit card customers, and it is these who are likely to be attracted to the new mortgage offers.
Clubcard users will be given one point for every £4 on their monthly mortgage repayments. That means anyone repaying £750 a month on a Tesco mortgage could gain £22 cash a year.
The real challenge for Tesco Bank will be when it launches its current account, but that is still some way off.
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