Best-buy mortgage rate drops below 1% for first time in a year

Halifax launched its 0.98% mortgage last week. It's a two-year 'tracker' mortgage, which means during that period the rate could go up or down but it's tied to a fixed economic indicator – in this case, the Bank of England base rate. So if the base rate rises or falls, the Halifax tracker rate will follow suit.

It's the first time in a year that we've seen a best-buy mortgage offer a sub-1% rate, and further evidence of a sustained downward trend in the wider market. Fixed-rate mortgages – where the rate's locked in for the fixed period – have also been getting cheaper. The cheapest two-year and five-year fixes were 1.39% and 1.79% respectively back in May – now they're just 1.05% and 1.44%.

Want to cut the cost of your mortgage? See our Remortgage Guide and First-Time Buyers' Guide, plus find the cheapest deal for you with our Mortgage Best-Buy Comparison.

How good is the 0.98% mortgage?

Halifax's tracker mortgage is a purchase-only product (ie, only for homemovers). It comes with a not-too-expensive fee of £999, and the deal lasts for two years – though remember, the initial 0.98% rate can go up or down during that time, depending on what happens to the Bank of England base rate.

It's also only available via a broker and on mortgages up to 60% loan-to-value (LTV) – ie, you can only borrow up to 60% of the home's value. That means you'll need a minimum of a 40% deposit for your new home to qualify. After the two-year period finishes, your mortgage will revert to Halifax's standard variable rate, which is currently 4.24%.

While Halifax's mortgage rate is certainly headline-grabbing and the cheapest we've seen for a year, there are lots of factors to weigh up when choosing the right mortgage for you. For example, it's important to factor fees into the overall cost (you can use our Ultimate Mortgage Calculator to do this) and some will prefer the security of a fixed-rate mortgage over a tracker mortgage – for full info on what to consider, see our Remortgage Guide and First-Time Buyers' Guide.

Check now if you can cut the cost of your mortgage

While the Halifax deal won't be right for everyone, if you're coming to the end of your mortgage deal or you're on your lender's standard variable rate (SVR), now's a great time to check if you can cut the cost of your mortgage as rates are low across the board.

Of course nobody can predict the future, and with a lot of uncertainty around at the moment – not to mention Brexit – it's impossible to say if mortgage rates could fall further. But what we do know is that rates are competitive currently and many can save £1,000s switching to a cheaper deal, so it's worth checking if you can save.

To benchmark your best deal, put your info into our Mortgages Best-Buy Comparison tool, which also factors in fees, then compare the top results it can find with the best deals a broker can offer.

For more tips on how to get a good mortgage deal, see our Cheap Mortgage Finding guide. To learn more about the differences between fixed and variable mortgages (such as a tracker), see our What type of mortgage to choose guide.