Yorkshire Building Society has launched a mortgage with a record low rate of 0.89 per cent.
The two-year discounted standard variable rate (SVR) mortgage is available from today (21 April) for anyone seeking to borrow up to 65 per cent of the value of their property.
The new product matches the Yorkshire’s SVR at a discounted level of 3.85 per cent for two years before reverting to the SVR, which is currently 4.74 per cent.
The rate is collared at 0 per cent, meaning it could fall or increase in tandem with the SVR during the next two years, and it has a product fee of £1,495, with an alternative £995 fee option available at 1.05 per cent.
Moneyfacts has verified the mortgage has the lowest rate in the UK, but it is only being offered direct to the borrower via YBS branches, telephone or online.
The lender has also recently made rate reductions of up to 0.16 per cent on selected 65 per cent, 75 per cent and 85 per cent loan-to-value mortgages, and introduced new cashback options.
James Farrow, senior mortgage manager at Yorkshire Building Society, said: “We are very pleased to offer borrowers the lowest mortgage rate ever available.
“The cost of funding has fallen in recent weeks and as a financially strong building society with no external shareholders to satisfy we have the ability to pass this on to borrowers.”
Mark Loydall, at Loughborough-based Cambourne Financial Planning, said he was puzzled by the move and he hoped the rate reduction would feed through to intermediary lending.
“There is no economic reason why they should be doing that,” he added. “They must want local business, otherwise they would be opening it out to intermediaries. They must be looking to grow their direct business slightly.”