UK bank launches cheapest ever mortgage rate at 0.89% but there's a MAJOR catch

But credit hunters will have to pay a whopping £1,495 fee to secure the “discounted Standard Variable Rate”. 

Yorkshire Building Society stepped up to offer the close-to-zero rate to those who have 35 per cent deposits or more.

It comes after it became cheaper for banks to borrow money and amid news that home buying has slowed on last year.

Interest rates have not increased for eight years and it’s a case of when not if the Bank of England will raise the base rate.

The 0.89 per cent deal matches Yorkshire’s current Standard Variable Rate (SVR), which is 4.74 per cent, but the new mortgage comes with a discount of 3.85 per cent for two years.

Aside from the hefty lump sum to secure it, there is a chance the SVR could rise which could leave borrowers at risk from higher repayments.

David Hollingworth, Associate Director Communications, at L&C Mortgages, said: “It’s so hard to tell what will happen with interest rates as there are other things in the mix with an election and Brexit on the horizon.

“One thing we do know is inflation is higher and that is eating into household monthly budgets.”

The news comes after UK retail sales posted their biggest quarterly fall in seven years in March, as the prices of everyday goods continued to climb.

They were down 1.4 per cent on the preceding quarter, and down 1.8% compared with February 2017, according to the Office for National Statistics.

Kate Davies, senior statistician at the ONS, said: “This is the first time we’ve seen a quarterly decline since 2013, and it seems to be a consequence of price increases across a whole range of sectors.”

Daily Express :: Personal Finance Feed

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