Lowest ever mortgage rate

Yorkshire Building Society, Britain’s second-biggest mutual lender, has unveiled a mortgage at 0.98pc, the lowest rate ever offered.

The deal is the cheapest nationally-available rate to anyone remortgaging.

It is a “discounted rate” which tracks the lender’s standard variable rate, currently 4.74pc, at a 3.76pc discount.

If the lender’s standard variable rate falls or rises, the rate for this deal will move down or up in line.

Like many of the lowest rates, this comes with a hefty fee of £1,495 and early repayment during the discounted period incurs a 1pc charge.

Mortgage rates have been falling rapidly this year, and the Bank Rate cut in August, from 0.5pc to 0.25pc, has fuelled this pattern.

There has been some speculation that the Bank of England might cut rates further.

The building society is one of several lenders which have dropped their rates for high-value borrowing recently. This mortgage is available for borrowing of up to £5m.

Last month Barclays reduced its rate for mortgages between £1m and £3m from 1.85pc to 1.49pc, fixed for two years.

Santander also cut its five-year fixed rate to 2.09pc from 2.59pc in September for those borrowing between £250,000 and £3m. It has no fees and £250 cashback.

In June HSBC launched a fixed-rate mortgage at below 1pc with a 0.99pc two-year fixed rate. Monmouthshire Building Society also offers a rate at 0.98pc with a £1,400 fee.

For buyers, the Yorkshire deal is slightly cheaper than the HSBC one. However, it does not offer free valuation and legals like some other mortgages, which makes it slightly more expensive than it appears. Paying for these could add another £500 to a remortgager’s costs.

The Monmouthshire deal offers free valuation and has no early repayment charges.

According to comparison site Moneyfacts, the average two-year fixed mortgage rate is now at 2.34pc, down from 2.67pc this time last year.

David Hollingworth, of mortgage brokers London and Country, said that this option would be more attractive to those borrowing a larger amount.

Fixed rates were available at almost the same level and offered more security, he added.

“You’ve got to be careful not to be purely drawn to the fee, and you also have to keep in mind that this is linked to standard variable rate.

“There’s potential that of course a variable rate could come down further, but you are still relying on the lender to cut their standard variable rate in line with the bank rate.

“The upside of having a variable rate is relatively small when you can fix at essentially the same level,” he said.

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Written by: Houseladder