Sainsbury’s Bank has taken the decision to withdraw from the mortgage market.
Following a strategic review, the bank has decided that it will no longer be open to mortgage applications with immediate effect.
The bank launched their mortgage product in 2017 and has blamed competition for its withdrawal from the marketplace.
Sainsbury’s Bank has assured that existing customers’ contracts will not be impacted and any of those currently in the application process will be honoured also.
Andrew Montlake, managing director of Coreco, said: “The level of competition in the market is causing a major rethink among lenders for whom mortgages are a bolt-on rather than their core business.
“Just as with Tesco, for Sainsbury’s the margins are no longer there and its mortgage division was almost certainly struggling to wash its own face.
“Lower home purchase levels are rubbing salt in the wound of the exceptionally low rate environment.
“Lenders are experiencing a double whammy of low rates, hammering margins, and relatively low transaction levels, hitting volumes.
“For peripheral mortgage players it’s a bridge too far, all the more so with the potential impact of Brexit yet to be felt.
“We don’t expect this to be the last withdrawal from the mortgage market. It’s pretty brutal out there right now and more departures are likely.”
Sainsbury’s Bank declined to comment.
However a note to brokers which has been seen by Mortgage Introducer did elaborate further on the decision.
David Buxton, head of banking at Sainsbury’s, wrote: “I am writing this morning to advise that, following a strategic review of Sainsbury’s Bank, we have taken the decision to withdraw from the mortgage market.
“This means that, with immediate effect, we will no longer be open for new mortgage applications. Our existing customers’ contracts will not be impacted by this news and we will of course honour any customers currently in the application process.
“I can assure you that this decision was not taken lightly. As you will appreciate, since we launched our mortgage product in 2017, the market has become increasingly competitive, with lower interest rates and narrowing margins.
“My team will be in touch with you directly over the next few days in order to discuss any questions you may have, and next steps.”
More to follow…