Mortgage price war ramps up with new 0.89% deal

Best ever mortgage offer
Best ever mortgage offer

A mortgage deal with the lowest rate experts have ever seen at 0.89% has been launched as the home loans price war intensifies.

Yorkshire Building Society is offering the loan to home buyers and people looking to remortgage - but they will need to have a deposit of at least 35% at the ready to cash in.

The two-year 0.89% standard variable rate (SVR) mortgage is being offered at a discounted rate.

The discounted level is 3.85% - and when the two-year period is up the rate goes up to Yorkshire Building Society’s SVR, which is currently 4.74%.

Because the rate is variable, if the Yorkshire’s SVR reduces during the two-year period, the 0.89% rate could also go down further.

But the rate could also increase if the building society increased its SVR.

Financial information website Moneyfacts said the 0.89% mortgage rate is the lowest on its records, which go back to 1988.

Borrowers wanting to take out the 0.89% deal will also need to stump up a product fee of £1,495, or alternatively they could opt to pay a lower fee of £995 and have a higher mortgage rate of 1.05%.

In March, Yorkshire Building Society launched a 0.99% two-year fixed-rate deal for borrowers with a 40% deposit.

The building society said it is also making interest rate reductions of up to 0.16% on some new mortgages for borrowers with deposits of between 15% to 35%, as well as introducing new cashback options on home loans.

James Farrow, senior mortgage manager at Yorkshire Building Society, said: “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.”