Lender offers record low mortgage deal

However, borrowers wanting to take out the Chelsea Building Society’s two-year fixed rate at 1.89 per cent will need to come up with a 40 per cent deposit and a £1,695 booking fee.

Financial information website Moneyfacts said that the deal is the lowest two-year rate on its records stemming back six years, and it is unlikely to have been beaten in earlier decades as the Bank of England base rate is currently at an all-time low.

Chelsea is part of Yorkshire Building Society, which also unveiled a new two-year fix at 1.94 per cent at 60 per cent loan-to-value (LTV) which comes with a £1,495 fee.

Rachel Springall, spokeswoman for Moneyfacts said a “frantic price war” has broken out between lenders to get the market-leading rate on short-term deals.