Tesco could extend into mortgage market
Tue, 21 Jul 2009
Tesco’s financial services department have shown strong signals of moving into the mortgage market. Tesco’s has recently sought a separate credit rating for their Personal Finance arm, allowing them to borrow directly from the wholesale money lending markets. Tesco’s have confirmed that they will not be seeking to lend to high risk borrowers, quelling earlier concerns that the supermarkets entry to mortgages may lead to an increase in high risk lending.
Senior executive Andrew Higginson has been reported as saying: 'We are very much moving towards being a standalone bank . If you're going to build a sizeable [ mortgage ] book, you would have to think about wholesale funding.'
Tesco’s top man, Sir Terry Leahy, has made it his ambition to turn Tesco into a ‘people’s bank’ and made public decelerations to that extent.
The publics confidence in the banking sector has been tarnished over the past 18 months with numerous banks going flop thanks to high risk lending strategies. This may give Tesco’s a good spring board to jump from; with a clean lending history and a strong and low risk lending strategy many will be tempted by their products