Monday, 6 August 2012 10:51 AM
Tesco has made its long-awaited move into the mortgage market with the launch of a range of fixed and tracker rate deals for people buying or remortgaging their home.
The deals are available via the supermarket giant from this morning and have the added incentive of one Clubcard point for every £4 of monthly mortgage repayments. That means someone paying a £750 month mortgage would get 2,250 points over a year worth £22.
The move by Tesco has been expected for some time and was expected to provide more competition in a mortgage market dominated by the big banks.
However, market observers pointed out Tesco’s rates are in line with those of its rivals following a series of reductions in the wake of the launch of the Bank of England’s Funding for Lending scheme last week.
Meanwhile the supermarket will only offer mortgages to customers who have a deposit of at least 20 per cent.
At 80 per cent loan to value, the rates range from 3.99 per cent for a two-year fix to 4.69 per cent for a five-year fix. A two-year tracker mortgage is available at the Bank of England base rate plus 3.49 per cent.
Customers looking for 70 per cent loan to value can get a two-year fix at 3.19 per cent, a five year-fix at 3.89 per cent and a two-year tracker at base rate plus 2.69 per cent. The booking fee for all these loans is £195 although fee-free mortgages are available at higher rates of interest.
Benny Higgins, chief executive of Tesco Bank, said: "Entering the mortgage market is a significant step in broadening the products we offer to Tesco customers. With a focus on serving Tesco customers for the long-term, we will take responsible lending decisions and have developed a mortgage business to meet our customers' needs now and into the future.
"We begin as we plan to go on - launching a product for Tesco customers designed to meet their expectations of value, customer service and reward."