On Saturday The Daily Telegraph reported that the supermarket had been in discussions with advisers about a potential sale and that it could recoup an estimated £1.3bn.

It added that exploring the sale was part of a wider review of the financial services arm, which saw profits drop 55 per cent to £31m last year, according to its annual report in June.

Sainsbury’s completed £1.1bn in new mortgage lending in 2018 and its overall loan book stood at £1.4bn, with net interest margin cut by a full 1.1 per cent to 3.8 per cent as the competitive market took hold.

It re-entered the mortgage market in April 2017, having withdrawn its previous offering in 2004.

A Sainsbury’s Bank spokeswoman said that the company would not comment on market speculation.

Such a move would mirror fellow supermarket Tesco which exited the mortgage market by completing the sale of its loan book to Lloyds Bank earlier this month for an estimated £3.7bn.

Broker reaction

David Hollingworth, associate director communications at broker firm L&C Mortgages, noted that it was increasingly hard for lenders to keep up in the highly competitive market.

“They have been extremely competitive in the past, but lenders are finding it hard to keep up with the big banks pushing rates down.

“Sainsbury’s current two-year fix is 1.6 per cent while HSBC is at 1.24 per cent. They are not pulling out but, it’s just very competitive and hard to keep up in the current environment.”

Hollingworth added that he had not seen a change in rate activity or broker communications from the lender.

“Sainsbury’s has had ambition and is only just a recent entry, but they have been a really good entry and had some excellent rates,” he said.

“We won’t be ruling Sainsbury’s out for product recommendations.

“It brought a very strong and well-known brand, but this market is pretty ferocious and if lenders are too far off on price they can very easily see volume drop,” he added.