Tesco Bank moves into new mortgage territory with independent brokers

 

Tesco Bank is extending its mortgage offering to include independent brokers, with the hope of dramatically increasing its customer base.

 

In an interview with The Telegraph this weekend, the business said it would start selling the loans through intermediaries in 2016.

 

The bank has already shown promise in the property market – since Tesco started selling mortgages in 2012, it has given out over £1bn in home loans. 

 

But to date they have all been sold directly to customers, and by brining independent parties on board Tesco will open its doors to a previously untouched part of the UK's mortgage market. 

 

Benny Higgins, chief executive of Tesco Bank, said the addition “gives us the opportunity to increase [our mortgage business] considerably”.

 

“We’ve been [in the direct market] for over two years now, and we realised that while we’re happy with how it’s going, we are only serving a modest proportion of Tesco customers,” he said.

 

“We’re operating in less than 10pc of the market,”  he continued. “Whilst it wasn't our intention at the very outset, it is clear to us that over half of Tesco customers are buying mortgages through brokers and that number is increasing under the new regulatory code.”

 

Mortgages offer banks the largest profits in the consumer banking sector, and since new rules were introduced to ensure loans are only given out to those able to withstand financial shocks, brokers have become an increasingly dominant force in the market. 

The bank, which is owned by the supermarket, offers services across insurance, mortgages, credit cards and savings, but the fact that it does not have many physical branches limits its ability to give sell mortgages without the involvement of a third party.

 

According to Higgins, the new mortgage system can be put into action when the required infrastructure is in place, which is expected to be ready during the first half of next year.