The bank, which has offered mortgages since 2012, has more than 23,000 mortgage customers with total lending balances of £3.7bn.
The announcement does not affect existing customers accounts and customers do not need to take any action.
If a sale of the Tesco Bank mortgage portfolio goes ahead, customers will be notified to explain what it means for their account.
Gerry Mallon, chief executive of Tesco Bank said: “In recent years, challenging market conditions have limited profitable growth opportunities. 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.
“To that end, we have made the strategic decision to focus on serving a broader range of customers in more specific areas, which means moving away from our mortgage offer.”