Woolwich and Barclays will be jointly offering a guaranteed lifetime tracker mortgage by the end of the month.
The loan will allow borrowers to track the base rate plus 0.04 per cent for two years and then change to a guaranteed lifetime tracker of 0.95 per cent above the rate.
Monthly payments on a 25-year repayment mortgage at 4.04 per cent range from £397 a month on a loan of £75,000 to £1,060 a month on a loan of £200,000.
The Woolwich also claims to offer one of the most competitively priced guaranteed lifetime offset deals on the high street, offering savings balances against the mortgage, and is guaranteed to track the base rate for the lifetime of the loan.
Commission terms stand at 0.3 per cent.
Woolwich and Barclays head of mortgages Andy Gray says: “Our new tracker mortgage has been launched for borrowers who want to get one of the best mortgage deals in the market.
“With homeowners anticipating the extra pressure on them over the next couple of years, with interest rates predicted to rise gradually, we are providing them with a cheap deal which reduces their payments in the short term and then gives them a guarantee for the life of the loan which could save them as much as £20,000.”