Savills Private Finance is introducing a two year fixed-rate mortgage at 3.69 per cent with three-year overhanging redemption penalties.
The lender predicts that base rates will fall to 4 per cent by 2000 which would equate to a mortgage rate of around 5.45 per cent.
Using this assumption, it says that the average cost of the mortgage over five years would be 4.75 per cent. This is over 1 per cent less than the best five year rates currently available.
SPF managing director Mark Chilton says: "Despite the three-year overhanging redemption penalties this product is simply the most attractive option available to borrowers."