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Santander joins bidders for Tesco Bank mortgage book

by: Marc Shoffman
  • 01/07/2019
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Santander joins bidders for Tesco Bank mortgage book
Santander is rumoured to have thrown its hat into the ring to purchase Tesco Bank’s £3.7bn mortgage book.

 

Tesco Bank put its 23,000-strong customer mortgage book on the market in May after stopping active lending.

Interested parties so far have included RBS and Nationwide, and now Santander is circling, according to The Times.

Santander’s mortgage market share is 11.3 per cent and a further acquisition would help cement its place as the UK’s third largest lender, just ahead of RBS.

Gerry Mallon, chief executive of Tesco Bank said in May that the mortgage market had become less profitable for the group.

“Our priority in any sale, is to complete a commercially acceptable transaction with a purchaser who will continue to serve our customers well,” he said at the time.

MPs have called for the book to be sold to an active lender, which would allow mortgage prisoners to move to better rate.

Such a move would also be backed by brokers.

If Santander were to go ahead and buy Tesco’s mortgage book then there will no doubt be sighs of relief all round from Tesco borrowers who have been saved from having the mortgage bought by a ‘vulture firm’ who will just sit on the loans and switch borrowers to their standard variable rate at the end of any term,” Jane King, mortgage adviser for Ash-Ridge Private Finance said.

“This would mean that any borrower who could not switch to a new lender would effectively be stuck on these high SVR rates as mortgage prisoners.  If the rumours are true then it is to Tesco’s credit that they have looked for an actively trading lender to take on their borrowers.”

Both Santander and Tesco Bank declined to comment.

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