Mortgage rates hit record low as Yorkshire Building Society launches 0.89pc rate

Helen Cahill
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Fierce competition in the mortgage market is driving down rates (Source: Getty)

The Yorkshire Building Society (YBS) has brought mortgage rates to an all-time low, offering a 0.89 per cent deal.

The product comes as banks compete to offer the most competitive rates to customers following the Bank of England cutting its base rate to 0.25 per cent.

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The two-year standard variable rate is available from today and is available for those borrowing up to 65 per cent of their property's value.

James Farrow, senior mortgage manager at YBS, said the cost of funding has dropped in recent weeks and that YBS was able to pass on the falling costs to customers because it does not need to satisfy external shareholders.

The record-low mortgage rates have boosted the re-mortgage market. In February, re-mortgage lending was up eight per cent year-on-year, with 31,000 home owners re-mortgaging their property, as compared to 28,500 the year before, according to figures from the Council of Mortgage Lenders (CML).

First-time buyers have also become a larger part of the mortgage market over the past year. Taxes on buy to let landlords have pushed out those who want to purchase second homes, making more room for people trying to get onto the housing ladder. Yesterday, the CML reported that the number of property sales to first-time buyers hit 342,000 in February, the highest figure over the last nine years.

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