"This is yet another signal that the mortgage market is more competitive than ever and lenders are scrapping it out to attract business"
The product comes with a £999 fee, less than the next lowest five-year fix from Barclays, which is offering a rate of 1.70% with a fee of £1,499.
David Hollingworth, mortgage expert at L&C Mortgages, commented: "This is yet another signal that the mortgage market is more competitive than ever and lenders are scrapping it out to attract business, whether it’s from those buying their first home, moving house or looking to switch to a better deal. More lenders fighting for business means that they need to stand out from the crowd and truly differentiate themselves. This, coupled with some easing in cost of funds, is forcing lenders to offer rates that demand attention. As a result, lenders are squeezing whatever they can out of their deals and offering more and more eye catching rates.
"Ironically, this means some borrowers are playing a waiting game rather than grabbing the opportunity in front of them. Our research found that more than a third of borrowers are languishing on standard variable rates despite the fact that ultra low mortgage rates are widely available.
"It’s important that borrowers consider the best overall value for them, particularly given the fact that the very lowest rates can carry steep fees. However most lenders will offer a range of rate and fee combinations so there should be something for everyone.
"In recent years, mortgage borrowers have been the big winners, as the Bank of England Base Rate not only remained at rock bottom but also fell further following the vote to leave the EU.
"With Brexit and the forthcoming General Election only adding to consumer uncertainty over the economy, borrowers have been thrown a lifeline to control their monthly mortgage payments - by cutting their cost and putting some certainty into their budgeting. It’s a win for them.”
