The lender announced in May it would no longer be offering mortgages and would sell its current portfolio of over 23,000 loans to another firm.
Today Tesco Bank confirmed it had sold this portfolio to Lloyds Banking group for £3.8 billion. It said all its residential mortgages would transfer to Halifax, which is a division of the Bank of Scotland and wholly owned by Lloyds Banking Group.
Gerry Mallon, chief executive of Tesco Bank, said: “Our focus is on how we best serve Tesco customers and align our resources effectively to their needs while ensuring that our offer remains sustainable in the long term.
“As a result, we made the decision to move away from our mortgage offering.”
What does this mean for borrowers with Tesco mortgages?
Tesco Bank said mortgages would transfer at the end of September but, in order to ensure a smooth transition, it would continue to service the accounts on a day-to-day basis until a full transfer date was confirmed.
It will be writing to customers to let them know when this will happen.
A spokesperson for Tesco Bank added: “Customers do not need to do anything right now. They’ll receive letters explaining that but if they have any questions, they can go to our website where we have posted information and a set of FAQs or give us a call.”
For those customers whose Tesco Bank mortgage tracker or fixed-rate ends before the transfer they can choose to stay or switch to a different provider.
Mark Gordon, director of mortgages at comparethemarket.com, said under the terms of the deal, customers should see no immediate change to their current rate or mortgage term following the transfer.
He added: “Even so, it may be worth some of those customers considering refinancing options as the savings could be significant.
“By shopping around, customers are more likely to find a competitive deal elsewhere – especially as mortgage rates are now very good value. Equally, for those on a standard variable rate, this is an opportunity to switch to a fixed deal which are often far more competitively priced.”
Reassurance
Meanwhile, Dilpreet Bhagrath, mortgage expert at online mortgage broker, Trussle, reassured Tesco borrowers who were concerned about the transfer. She explained Lloyds Banking Group was one of the market leaders in mortgage lending.
She added: “It’s positive that Lloyds Banking Group has acquired Tesco’s mortgage book. The news should give customers peace of mind that their mortgage is being proactively looked after whether they’re part way through their mortgage or coming to the end of their mortgage term.
“Once the accounts have been transferred over, customers’ mortgage terms will remain as they were with Tesco.”
