The mortgage price war among lenders intensified today as a bank launched a deal with a record sub-1.5% rate.

The two-year fixed-rate mortgage at 1.49% is is available from HSBC.

The rate is the lowest for this type of deal that financial information website Moneyfacts has on its records, which go back to 2007, before interest rates fell to record lows.

But borrowers need a hefty 40% deposit and a £1,999 fee to qualify, which highlights the importance of always taking the fee into account, particularly on short-term products, when comparing deals.

Plummeting mortgage rates

Lenders have been scrambling to slash mortgage rates since the Government launched a scheme a year ago to kickstart the housing market.

The average rate offered across the market on a two-year fixed deal for someone with a 40% deposit or equity has plummeted from 4.47% one year ago to 3.32%, according to Moneyfacts.

Three is also evidence to suggest the price war has trickled down to help more people with smaller deposits in recent months, as lenders have reported more first-time buyers entering the market.

The typical two-year fixed rate for someone with a 10% deposit has edged down from 5.48% this time last year to 4.63%.

HSBC is not part of the Government's Funding for Lending scheme, which gives lenders access to cheap finance if they pass the benefits onto borrowers.