The Co-operative Bank has launched what it claims is the UK’s lowest-ever mortgage rate.
The deal is fixed for two years at 1.09 per cent for mortgages of up to 60 per cent LTV.
Available to new and existing borrowers, it comes with an arrangement fee of £1,499.
Stuart Beattie, head of mortgages at The Co-operative Bank, said: “With rates at record lows, it’s a great time for customers to consider taking out a fixed-rate product.
The Co-operative Bank has also launched its lowest-ever 90 per cent fixed rate mortgage deal – fixed at 2.64 per cent for two years along with a three-year fixed rate at 1.89 per cent for loans up to 60 per cent LTV.
However, Nick Thompson, a mortgage broker with Shropshire-based Matrix Capital, said the high arrangement fee meant the low rate was effectively a gimmick.
He said: “The Co-op has got another product with a higher rate but no fee, and when you calculate what the overall payment is, they are similar.”
Wesley Davidson, director of Bristol-based Fox Davidson Mortgage Brokers, said: “It is good to see lenders continue to bring down interest rates, and that the market remains competitive.
“I would have thought that rates couldn’t continue to come down, but maybe banks are in a position where they are bringing out rates to gain new customers rather than make serious amounts of money.”