It also defended its rates as competitive on a true cost basis, after weekend media coverage slammed its pricing for being off the pace.
“We believe we have launched a range of competitive products – if you look at the true cost, these rates are competitive. There is also no need to have a 40% deposit and you don’t have to have a current account with the bank,” said David McCreadie, managing director of Tesco Bank.
McCreadie said there are no fixed lending targets and the vast majority of its lending would be funded by retail deposits, which had seen 70% growth since launch.
The first regulated mortgage lender to launch since Aldermore in May 2010 also said it would be ready to react if the regulator demands all mortgages must be sold with advice in the Mortgage Market Review (MMR), expected out in September.
“If the fully-advised statute does come emerge in the MMR, we will comply with that,” he said.
The highly-anticipated launch of the direct-only range offered at a 70% to 80% Loan to Value includes a three and five-year fixed rate mortgage, and a two-year base rate tracker.
Loans start at 3.19% for a two-year fix offered up to 70% and a flat booking fee of £195 plus a £800 or £0 product fee. The Standard Variable Rate is 4.24% and the maximum loan amount will be £500,000.
The non-advised mortgages will be underwritten on a “case-by-case basis” and offered online and via a call-centre six days a week.
The purchase and remortgage products offer customers Clubcard points to a ratio of one point for every £4 spent, so on a £750 monthly repayment, Tesco will return £22 a year in Clubcard points, or £88 in its Clubcard Voucher Exchange.
See Mortgage Solutions’ full coverage of the launch with all the industry reaction, the launch story and Ray Boulger’s blog.
