Yorkshire Building Society launches 'cheapest-ever' mortgage

Yorkshire Building Society has launched what Sky News says is Britain's "cheapest-ever" mortgage deal.

Buyers will be offered an effective 0.89 per cent for two years - which Moneyfacts says is the lowest rate "in its records going back to 1988".

However, the deal is not a fixed rate but rather a discounted variable rate, meaning the borrower effectively enjoys a time-limited 3.85 per cent discount to Yorkshire's standard variable rate of 4.74 per cent. If that changes, so will the headline rate on this mortgage.

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It is also limited to those with a hefty 35 per cent deposit either in cash, for new buyers, or in equity in the buyers' current home.

"A £349,000 mortgage payable over 26 years would cost an initial £1,253.02 over the two-year period before going up to £1,889.13 under the [standard variable rate]," says Sky.

There is also a product fee of £1,495.

Low base interest rates and intense competition for buyers are seeing fees being reduced.

However, a "best-ever" deal by Atom Bank, priced at 1.29 per cent fixed for five years, was pulled earlier this week after just nine days on the market.

"The… deal, over five years, was comparable in price to the best available deals offered over a two-year term," says the Daily Telegraph.

It was being offered with a £900 fee and for those with a deposit of 40 per cent. That is was pulled so soon indicates that demand was extremely high: the Telegraph says "hundreds of millions of pounds'" of applications were received.

According to broker London & Country, the cheapest mortgage available for those with most lenders' minimum deposit of five per cent is the 2.99 per cent two-year fix from the Nottingham Building Society.