Tesco Bank has thrown in the towel on mortgages, ceasing all new lending as it attempts to sell of its existing ledger book.
Currently the bank has 23,000 mortgage customers who it has lent £3.7bn, a portfolio it is now exploring the possibility of offloading to another provider.
Bank boss Gerry Mallon said “challenging market conditions have limited profitable growth”.
“Our focus is on how we best serve Tesco customers and align our resources effectively to their needs while ensuring that our offer remains sustainable in the long term,” he added.
“To that end, we have made the strategic decision to focus on serving a broader range of customers in more specific areas, which means moving away from our mortgage offer.
“We have therefore chosen to cease lending to new customers and announce our intention to explore a sale of our portfolio. Our priority in any sale, is to complete a commercially acceptable transaction with a purchaser who will continue to serve our customers well.”
Tesco Bank first began offering mortgages in 2012, but in February slashed its home loans fees and tried to attract new customers with cashback deals and other incentives as housing market activity was restrained.
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The supermarket’s banking arm was recently named the worst challenger bank by customers, with 6.3 per cent of surveyed users threatening to leave the bank over its complaint turnaround times.