The sub 1% deal is a two-year discount mortgage deal for borrowers with a 40% deposit. It’s priced at 0.99%, comes with a £999 fee, and is available to remortgage borrowers only. It will be available from 23 April.

To be approved for the low discount rate, borrowers are subject to strict requirements and a maximum loan-to-value (LTV) of 60%.

In a communication to mortgage advisers, the mutual said only employed borrowers would be eligible and they must have an employment history of six months and a permanent contract. It added that three month’s payslips and bank statements are required as income evidence.

However, it has since told YourMoney’s sister publication Mortgage Solutions that this part of the product criteria has not been confirmed yet.

The minimum loan is £150,000 and the applicant can have no credit issues. The mortgage must be on a capital repayment basis, and while capital raising is allowed it cannot be for debt consolidation or business purposes.

Moneyfacts has confirmed it is currently the lowest mortgage interest rate on the market. The next lowest interest rates, all at 60% LTV, are:

• Platform: 1.06% fixed for two years, for purchases and remortgaging
• Cumberland Building Society: 1.08% discounted variable rate for two years, for remortgaging only
• NatWest Intermediaries: 1.08% fixed for two years, for remortgaging only

Chris Sykes, associate director of Private Finance, said: “We previously saw rates like this when the base rate was 0.25%, so with it now at 0.1% this is a fantastic step in the right direction and we hope other lenders follow suit.

“We see this as Hinckley and Rugby having real faith in the market and pitching for that really competitive high quality low LTV clientele that lenders like to have on their books to lower the overall risk of their lending proposition.

“I am intrigued to see if any lenders will follow suit, and if anyone would be offering this on a fixed rate rather than a discount variable.”