Metro Bank sells off a third of its mortgage book to NatWest: What’s behind the move and how does it affect customers?
- The challenger bank has sold a third of its residential mortgages to NatWest
- Around 13,000 loans will be transferred across in the next 18 months
- Metro Bank says ‘nothing changes at the moment’ for existing customers
- It will use the proceeds to move into personal loans and credit cards
Metro Bank has sold some of its mortgages to NatWest, in a move that will affect 13,000 customers.
The sale applies to residential, owner-occupier mortgages, and it means around a third of the residential mortgages held by the challenger bank have been shifted.
NatWest said the value of the portfolio was around £3.1bn, meaning a typical home loan outstanding of around £238,000.
Metro Bank plans to use the revenue from the sale to move in to personal loan and credit card lending.
Metro Bank has sold a £3.1bn portfolio of residential mortgages to NatWest
While the sale has already been agreed, the loans themselves will be transferred from Metro Bank to NatWest over the next 12 to 18 months.
Metro Bank told This is Money that ‘there are no immediate impacts on our existing mortgages,’ and added that it was still open for business for new mortgage applications.
The portfolio mostly consists of repayment mortgages with an average remaining fixed-rate term of around two and a half years.
It has a weighted average loan to value of around 60 per cent.
Daniel Frumkin, Metro Bank’s chief executive officer, said: ‘The sale of part of our residential mortgage portfolio will provide us with further lending capacity and enable us to shift our asset mix and expand our unsecured lending portfolio.’
In its half-year results in August, Metro Bank said it had lost £109m due to Covid-19.
The challenger bank, which launched in 2010, was just a few months into a four-year turnaround plan when the pandemic hit.
This followed a major accounting error and the departure of its chief executive and chairman.
Meanwhile, NatWest swung back into profit in the third quarter, although it is still down on the year to date.
Alison Rose, chief executive of NatWest, said growing its mortgage book was an ‘important strategic priority as [it builds] a bank that delivers sustainable returns for shareholders’.
Last week, it relaunched 10 per cent deposit mortgages. It also recently revealed plans to help customers become more energy efficient and has a bold aim that half of its mortgage book will be an EPC C rating or above within the next decade.
Metro Bank shares are up 28 per cent today to 146.95p, its highest point since before the pandemic.
What do I need to know?
Metro Bank said that ‘nothing changes at the moment’.
If your mortgage is affected by the sale, the bank will write to you before the transfer of the mortgages to NatWest takes place to let you know what happens next. This transfer is due to go ahead in the next 12 to 18 months.
Between now and the transfer, your mortgage will continue to be managed by Metro Bank. It will have the same terms and conditions, rate, and mortgage term as it does now now, and you will not have to change your direct debit or contact details.
If you have just applied for a mortgage with Metro Bank, your offer will remain the same. Equally, customers who have just accepted an offer will not see that offer change.
Customers should contact Metro Bank’s mortgage servicing team with any questions.