Asda is to start selling mortgages by the end of the year. The UK's second-biggest supermarket is in talks with three national brokers to offer its customers access to the cheapest loans.

The move would challenge Tesco's financial services arm, which in November ditched a three-year effort to sell own-branded mortgages in favour of offering a service through London & Country, the broker.

Asda, which serves 16 million shoppers every week, is also understood to be considering introducing an estate agency service with local agents within the next three months after its trial own-branded agency that began in the North East in 2006 flopped because of poor sales.

Gev Lynott, director of new business at Asda, said: “We are in a tender process with three brokers. We want to give customers access to the whole market. We would like to offer a one-stop shop for a good deal on everything by the end of the year, although there is no launch date yet.”

Like its competitors Tesco and Sainsbury's, Asda already sells financial services, including savings accounts, credit cards and general insurance both online and by phone. However, Tesco is the only other supermarket to offer mortgages.

Experts said the timing of the broker service was unusual, given the turmoil in the market, which has drastically reduced the supply of home loans and made the remaining deals much more expensive.

Melanie Bien, director of Savills Private Finance, said: “The timing is unusual given what is happening with the credit crunch. Any broker winning this tender will have to deal with a high volume of relatively small value mortgages and many of these people could have credit problems.”

Brokers have suffered recently as some of the biggest lenders have denied them access to their best mortgage deals, choosing to sell directly to homeowners to curb demand.

However, the proportion of mortgages sold through brokers has risen since the crunch, from 63 per cent last year to 69 per cent now, according to the Council of Mortgage Lenders.

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