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First-time Buyers

Tesco increases lending by 77%

paulajohn
Written By:
paulajohn
Posted:
Updated:
02/10/2013

Tesco Bank increased its mortgage lending by 77% in the six months from February to August 2013.

The bank began offering mortgages in August 2012 and had advanced £258m in secured mortgage lending by February 2013. By August that figure had grown to £456.8m.

According to the Council of Mortgage Lenders’ August list of largest lenders, Aldermore Mortgages advanced £0.5bn in gross mortgage lending. Kent Reliance Building Society advanced £0.3bn.

The lenders’ body estimated Tesco Bank held a 0.2% market share with lending of £0.3bn.

Tesco described its mortgage product as “making good progress.”

It said the growth had been supported by use of the Bank of England’s Funding for Lending Scheme.

According to the central bank’s latest figures, Tesco has drawn down £600m from the scheme.

Tesco Bank’s mortgage pipeline – offers that have been agreed in principle but have not been completed – totalled £67.4m.

While mortgage lending experienced the biggest growth, unsecured lending represented the vast majority of Tesco’s lending and jumped 12% between February and August 2013 to £6.1bn.

The bank’s total lending reached £6.6bn. In June, the lender expanded its mortgage range to include 85% loan-to-value fixed rate and tracker products.

Tesco Bank saw trading profits of £88m, which are 6.4% lower than the previous year.

The lender said this was due to the end of a legacy arrangement, in which the bank had received income from Direct Line.

The Tesco Group reported a 23.5% drop in profits over the six month period. The firm blamed the fall on a challenging environment for retail sales, particularly in Europe.