Yorkshire Building Society launches 0.99% mortgage as competition heats up

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Competition in the mortgage market is heating up once more as a lender has unveiled a new market-leading deal with a rate below 1%.

Yorkshire Building Society said the two-year mortgage at 0.99% is its lowest fixed-rate product.

Financial website Moneyfacts.co.uk said the rate is the lowest fixed rate currently on the market for this type of deal.

Borrowers wanting to take out the mortgage, which launches on Friday, will need to stump up a £1,495 fee and they will also need to have a 40% deposit or equity.

The deal will be available to both home buyers and people looking to re-mortgage. 

Recent lending figures have shown a huge jump in home owners re-mortgaging as they look to lock into the low rates available generally across the market.

The Council of Mortgage Lenders (CML) said this week that home owner re-mortgage activity surged by 46% month-on-month in January.

Yorkshire's new deal is not the only sub-1% fixed-rate to have appeared on the market.  

Rachel Springall, a finance expert at Moneyfacts, said an 18-month fixed-rate deal from Santander at 0.99% was withdrawn from the market in February. HSBC also had a two-year fix at 0.99% which was withdrawn from the market in December, she said. 

Ms Springall said: "It's clear to see that there is still some fierce competition in the mortgage market, which will be music to the ears of borrowers hoping to secure a low fixed rate for over the next few years."

Ms Springall said that with any mortgage deal, it is important for borrowers to work out the overall cost, including any fees, to see if it is the best possible choice for them.

Yorkshire Building Society said it also offers lower fee and fee-free mortgages suitable for people who wish to keep up-front costs down.