Hinckley & Rugby Building Society is set to launch a two-year variable mortgage at a rate of 0.99% in the next two weeks, with more firms expected to follow suit in an attempt to capitalise on the booming property market.

Mortgages with rates below 1% disappeared as COVID-19 emerged in 2020 and lenders withdrew hundreds of deals due to fears of a price crash and rises in unemployment rates, The Daily Telegraph reports. 

However, house prices have since soared to record levels after Chancellor Rishi Sunak cut stamp duty and locked down families sought out more space.

Chris Sykes of Private Finance, a mortgage broker, said: “These are incredibly competitive rates and there will be other lenders looking to match.” Mr Sykes said the deal is aimed at ultra-safe borrowers, requiring a 40pc mortgage and minimum loan of £150,000. It will be restricted to remortgage customers only.

The lowest discounted variable rate currently available for two years is at 1.08% with Cumberland Building Society, according to data from analysts Moneyfacts.