Sainsbury's Bank exits mortgage market

In a Q2 trading statement, the Bank said it will "immediately stop new mortgage sales" as part of a five year plan which will also see 55 branches close.

Andrew Montlake, managing director of Coreco, commented: “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.”