Retailer Tesco is launching mortgage products through Tesco Bank, allowing Tesco Clubcard holders to earn points on repayments.
It is offering mainly fixed-rate deals, with interest rates ranging from 3.19 per cent to 5.09 per cent and a minimum deposit of 20 per cent.
With many fixed-rate deals currently offering interest rates of below 3 per cent, Tesco’s mortgages are not the cheapest of the market.
However, customers are allowed to repay 20 per cent of the loan amount off each year without incurring a penalty.
Philip Clarke, Tesco Plc’s chief executive, 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.”
Head of Tesco Bank, Benny Higgins, said: “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.”
The trend for retailers to move into the mortgage market could provide a much needed boost to competition.
Last month Asda rebranded its financial services division as Asda Money, and the new brand covers mortgage lending.
However the retailer has not confirmed whether the rebranding will eventually lead to it stepping into the mortgage mortgage.
Marks and Spencer has expanded its M&S Money division with bank branches opening in 50 stores over the next two years.
The branches, which will mirror the stores’ opening hours, will start to offer mortgages in the future.
Marks & Spencer Retail Financial Services Holdings is 100% owned by HSBC.
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