The bank announced, as part of its financial services five year plan, it would immediately stop all mortgage sales in a move which comes only months after Tesco pulled the plug on its mortgages.
People who currently have mortgages with Sainsbury’s Bank will experience no direct changes as a result of the exit. What’s more, the bank will also honour any current applications which are currently being processed, subject to the usual checks.
It is understood the bank has not yet made a decision over which lender it will sell its mortgage book to. Tesco sold its own mortgage business to Halifax – part of the Lloyds Banking Group – for £3.8 million earlier this month.
Disappointing
Rachel Springall, finance expert from Moneyfacts.co.uk, said the news was ‘disappointing’. “Sainsbury’s Bank came into the challenge the usual players in this arena, but unfortunately selling mortgages is no longer sustainable to them,” she said.
Indeed, Sainsbury’s mortgages offered some very tempting incentive packages alongside their popular Nectar scheme, where customers could gain points to spend in store at and other outlets, and this provided an additional perk too.
Springall added: “The mortgage market is exceptionally challenging right now with margins becoming ever tighter, it is inevitable to see lenders call it quits and walk away from this sector.”
Tough competition
With Sainsbury’s following in the same footsteps as Tesco, there has been much speculation about which lenders might continue the trend. The mortgage market is currently very competitive, making it harder for firms who are not big players in the industry to maintain their position.
Andrew Montlake, managing director of mortgage broker, Coreco, said the level of completion in the market was causing a major rethink among lenders for who mortgages were a ‘bolt-on’ rather than their core business.
He added: “For peripheral mortgage players it’s a bridge too far, all the more so with the potential impact of Brexit yet to be felt.
“We don’t expect this to be the last withdrawal from the mortgage market. It’s pretty brutal out there right now and more departures are likely.”
