The banks have received a battering in recent years and trust in them has taken a nosedive thanks to PPI scandals and the recession of 2008/9. But can the supermarkets really do any better when it comes to mortgages?
The big four – Sainsbury’s, Tesco, Asda and M&S – already have banking arms offering a range of insurance and personal loan products but now Sainsbury’s has announced it is re-entering the mortgage market, offering a range of loans starting at just 1.34%.
The supermarket giant joins the likes of Tesco in offering customers competitive mortgage rates. M&S mooted the idea back in 2012 and the slogan, “It’s not just a mortgage, it’s an M&S mortgage” looked like it might become a distinct reality. However, the high street department giant has kept to loans and insurance for now.
Sainsbury’s however, has decided it is worth a punt and re-entered the market after a more than a decade-long hiatus.
Catherine More, head of mortgages for Sainsbury’s Bank, said: “Mortgages and grocery shopping are some of our customers’ biggest household expenditures and we’re uniquely placed to help them out with both.
“We’ve built our new mortgages in response to our customers’ needs, they told us they wanted to feel supported through the whole process, that they wanted the flexibility to pick the advice that suits them, and to receive a good deal.”
The new range initially includes a two (fee and no fee options), and five-year fixed rate product, and a two-year tracker with loan-to-values (LTVs) of up to 90% on mortgages of up to £500,000. The supermarket will also consider customers aged up to 70 years old.
For example, a two-year fixed rate mortgage on a LTV of 75% is available at 1.34% while a five-year fixed rate of on a LTV of 90% is available at 2.89%.
In addition to competitive rates the supermarket is rewarding loyal customers with hundreds of pounds off their shopping in vouchers for the first two years.
Andrew Hagger, of Moneycomms, said: “It is good to see a provider entering the mortgage market with such a competitively priced range of products across the full range of LTVs.
“The added bonus of a shopper reward is an innovative move that makes the deal even more appealing for Sainsbury’s shoppers – the option to earn up to £400 vouchers off shopping over two years is not to be sniffed at.”
Sainsbury’s rates compare favourably with Tesco’s which offer two-, three- and five-year fixed rate mortgages from 1.33% for a LTV mortgage of 80% as well as two-year tracker mortgages from 1.65%.
David Hollingworth of L&C Mortgages which is partnering with Sainsbury’s to offer the loans, said: “We welcome more competition in the mortgage market and particularly from those entrants that have put real customers at the heart of their design. We’re delighted to be working with Sainsbury’s Bank as initial intermediary pilot partner.”