Lloyds Banking Group has agreed to buy Tesco Bank’s mortgage book in a £3.8 billion deal, it was announced today. The move will see more than 23,000 customers currently repaying a mortgage to Tesco Bank being transferred to Halifax. Tesco announced its plan to stop lending and sell its existing mortgage loans back in May this year. The British retail bank cited “challenging market conditions” for limiting profitable growth opportunities in recent years.
Commenting on the sale, Gerry Mallon, Tesco Bank Chief Executive, said: “In May we announced our decision to stop new mortgage lending while we explored our options to sell the mortgage book.
“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. Our priority throughout has been to complete a commercially acceptable transaction with a purchaser who will continue to serve our customers well.
“After a thorough process, we are pleased to confirm that we have agreed the sale of our mortgage book to Lloyds Banking Group, operating under the Halifax brand. We are confident that they will continue to provide our customers with an excellent customer experience.”
A post on the verified Tesco Bank Help Twitter account today read: “You may have seen today’s announcement about the sale of our mortgage portfolio. We are writing to all impacted customers to let you know what this announcement means for you.
“We also have a range of FAQs available online,” it adds, beside a link to the Tesco Bank guide.
Fixed Rate customers
According to the Tesco Bank guide, for fixed rate customers, there will be no change to interest rates for the duration of the fixed term.
Tracker Rate customers
Those who are on a Tracker rate mortgage will see their interest rate continue to move in line with Bank of England base rate changes.
Two weeks ago, Tesco Bank said that until the transfer to Halifax completes, the company would write to borrowers when their Fixed rate or Tracker rate period ends, in order to confirm options.
After this date, Tesco Bank said that Halifax would be the company getting in touch.
Standard Variable Rate customers
In the guide, posted two weeks ago, Tesco Bank wrote: “You don’t need to do anything right now.
“Until the transfer to Halifax completes, we’ll continue to contact you to let you know of any changes.”
Tesco Bank have confirmed that they will continue to provide a full service to existing customers, up until September 27, 2019.
This includes making term amendments, product transfers, additional borrowing, porting, and payment holidays – known as the flexible features of the mortgage in your T&Cs.
Current applications being processed
Should a new mortgage application have been submitted before Friday May 24 this year, then it will continue to be processed.
This process must be completed by December 14, 2019.
However, should one wish to cancel their application, they can do so by calling 0345 217 2050.
Tesco Clubcard points
Borrowers who have registered their Tesco Clubcard to their mortgage account, who haven’t repaid their loan in full before September 27, 2019, will collect Clubcard points until that date.
Tesco Bank have said they will gift Clubcard points to borrowers as a thank you for their custom, upon their move to Halifax.
This gift may vary depending on the type of mortgage customer a borrower is.