UK house prices: The return of cheap housing finance? Chelsea Building Society unveils the first tracker mortgage to be launched with an interest rate lower than one per cent

 
Emma Haslett
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The launch suggests cheap finance is back - but only for borrowers who can stump up a 35 per cent deposit (Source: Getty)

When the sub-prime mortgage bubble burst, everyone blamed cheap borrowing - but that clearly hasn't perturbed the Chelsea Building Society, which today unveiled the first ever tracker mortgage launched with an interest rate below one per cent.

To be fair, housebuyers who want to borrow under the scheme need to meet pretty stringent restrictions, including having a 35 per cent deposit and paying £1,545 in fees.

But if they can do that, they're rewarded with an interest rate of 0.98 per cent - 0.48 per cent above the Bank of England's base rate.

The next best tracker mortgage deal comes from the Post Office, which is offering a rate of 1.08 per cent for borrowers with a 40 per cent deposit (and with a fee of £1,995), while the Yorkshire Building Society (which owns Chelsea) began offering a two-year fixed rate of 1.07 per cent last week.

The news comes as signs suggest competition among mortgage lenders is beginning to heat up. Figures released this week showed the biggest spike in mortgage lending since April 2009, with the number of mortgages given approval rising to 68,076 in April, from 61,945 in March.

At the same time, the number of people buying homes without needing to borrow has increased massively: according to figures published by Nationwide on Wednesday, almost four in 10 people paid cash for properties during the first quarter of this year - suggesting the scramble for buy to let properties continues apace.

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