If you're currently house hunting or considering remortgaging, you may have been interested to hear that Britain's lowest ever mortgage rate has been launched on Friday, priced at just 0.89% for two years. The deal has been launched by Yorkshire Building Society and offers prospective homeowners the opportunity to borrow money for a two year period on a Standard Variable Rate.
Financial experts have said that the offer represents the lowest mortgage rate since records began in 1988, and it comes just a few weeks after the building society offered a fixed rate mortgage at 0.99%. Considering signing up? Here's everything you need to know about the new mortgage rate…
© Photo: iStockWhy are rates so low?
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."
STORY: All you need to know about lifetime ISAs as they launch in the UK
What's on offer?
The deal offers a Standard Variable Rate of 0.89% for two years, and is available to people with larger deposits of 35%. It represents a discount of 3.85% for the first two years of Yorkshire Building Society's SVR product.
© Photo: iStockWhat's the catch?
The deal is only available to people with a deposit of at least 35% and borrowers will have to pay out a product fee of £1,495 to secure the rate. For a lower fee of £995 borrowers can secure a rate of 1.05%. As the mortgage is based on a variable rate it means that borrowers are at risk of having to make higher repayments if the SVR rises throughout their term.
STORY: This is how much you should be saving each month for a happy retirement
If you want more certainty you may be better signing up for a fixed-rate mortgage deal where the rate is locked in for the duration of the deal, which is typically for two, five or ten years.
See our latest money features here.
