Summer mortgage price war breaks out as lenders reveal a string of offers below 1%

A summer mortgage price war has broken out as lenders offer some of the lowest rates ever seen.

There are now 11 banks and building societies offering a total of 33 home loans priced below 1 per cent.

Experts say this is the largest number of sub-1 per cent mortgages ever seen – with lenders expected to keep slashing rates as the competition heats up.

But with interest rates expected to rise in the longer-term to keep a lid on rising inflation borrowers may need to act fast to grab the cheapest deals.

Earlier this week, Britain’s biggest building society, Nationwide, launched a five-year fixed rate mortgage at 0.99 per cent.

It is the first time five-year deals have dipped below 1 per cent. Other lenders are predicted to follow suit.

The best deals on offer are still reserved for those with healthy deposits of at least 40 per cent. But mortgage costs are falling across the board.

The average two-year fixed rate for buyers with a deposit of 10 per cent, for example, has fallen from 3.52 per cent to 3.12 per cent since March.

On a typical £150,000 loan over 25 years – this is a £32 a month or £384 a year saving.

The fight for customers has come about as the stamp duty holiday starts to wind down – with lenders having to fight harder for new business.

There are now 552 loans on offer to borrowers with 10 per cent deposits, up from just 70 in July last year.

Andrew Montlake, of mortgage broker Coreco, said: ‘For those with a healthy deposit this is probably the most competitive time ever to obtain a mortgage.’

He added it was also a good time for those at the end of deals to switch.

But James McGregor, director of Mesa Financial, warned that the low mortgage rates would not last for ever as the Bank of England looks to rein in rising inflation.