Tesco has launched a five-year fixed rate deal aimed at borrowers looking to remortgage their homes.
Available to customers with a 40 per cent deposit, the product has an interest rate of 1.68 per cent and comes with a fee of £995.
The lender has also unveiled a two-year fixed rate for remortgage customers with a rate of 1.53 per cent and no product fee, available at 60 per cent loan-to-value.
Early repayment charges may apply during the initial fixed rate period.
As an added bonus, customers can collect one Clubcard point for every £4 on their monthly repayments.
The products are available direct from the bank and through Tesco Mortgage Intermediaries.
David McCreadie, managing director at Tesco Bank, said: “We are pleased to introduce our new market-leading five-year fixed-rate product for customers who are looking to remortgage their home, helping them to make their money go that little bit further.
“As an extra little help, all customers also collect Clubcard points on their mortgage repayments, giving them access to the great benefits provided by Tesco Clubcard partners including family meals and days out.”
Tony Silver, director at London-based White House Mortgages, said: “It is a good rate. I think the time is right for these challenger banks and new entrants to break down the old rules.
“I don’t think it will make a big dent in what I do, but anything that the supermarkets can do in order to drive prices down in the mortgage market has to be a good thing.”
Andrew Montlake, director at London-based Coreco Group, added: “This is a very good rate and shaves a slight amount off the next lowest deal from HSBC. This really shows what the mortgage market is doing at the moment, with lenders engaging in slight rate movements to move to the top of the best buy lists.”