Tesco has launched a range of mortgages. The supermarket is offering Tesco Clubcard holders points in return for repayments.
The range includes two, three and five-year fixed rate mortgages, and a two-year base rate tracker.
Rates start at 3.19% (two-year fixed, maximum LTV of 70%) and they are offering mortgages up to a maximum of 80% LTV.
All products will move onto the Tesco Bank Standard Variable Rate at the end of the initial fixed or tracker rate period.
There is a flat booking fee of £195 on all products and customers can choose between a £0 and £800 product fee option to suit their needs. Early Repayment Charges apply during the initial rate period.
Philip Clarke, Chief Executive, Tesco said: “Customers want choice in banking from a brand they know and trust to deal with them fairly.
“The launch of Tesco Bank mortgages is a major milestone towards offering Tesco customers a full retail banking service.”
Benny Higgins, Chief Executive of Tesco Bank, commented: “Entering the mortgage market is a significant step in broadening the products we offer to Tesco customers.
“With a focus on serving Tesco customers for the long-term, we will take responsible lending decisions and have developed a mortgage business to meet our customers’ needs now and into the future.
"We begin as we plan to go on – launching a product for Tesco customers designed to meet their expectations of value, customer service and reward.”
Andrew Montlake, of independent mortgage broker Coreco, said: “The additional competition that Tesco will bring to the mortgage market is of course to be welcomed and will hopefully help to keep the big banks on their toes.
“Whether a supermarket brand, even one as strong as Tesco’s, can become a serious player in the mortgage market remains to be seen and the prospect of mixing groceries, Clubcard points and the largest loan you are ever likely to take out will not appeal to all.”
Tesco Bank already has 6.5million customers with credit cards, savings, loans and insurance products and is seen as being one of the best-placed challengers to break into the retail banking big league.
Whilst Tesco does not offer the best deals in the market, it will be interesting to see how brand strength and customer incentives affect take up of their products.
Tesco have confirmed that building their mortgage business would be a “long-term project”.