The battle between mortgage lenders to offer ultra-low rates has intensified, with the launch of a two-year fixed-deal with the lowest rate that experts have ever seen.

The new deal from Yorkshire Building Society has a rate of 1.07per cent and comes with a product fee of £1,369. It is available to borrowers with a 35per cent deposit.

Rachel Springall, a spokeswoman for financial information website Moneyfacts, confirmed the rate is the lowest for a deal of its kind on its records, which go back to the late 1980s.

Other similar deals which it has recently seen on the market include a two-year fixed rate at 1.09per cent from the Co-operative Bank, which has a £1,499 fee and is available to people with a 40per cent deposit.

Yorkshire said it has also been reducing rates across its range by up to 0.35per cent. It is one of a string of mortgage lenders which have chopped their rates in recent months to some of the lowest levels they have ever offered.

Mike Regnier, Yorkshire Building Society's chief commercial officer, said: "Earlier this year, we launched a 1.18per cent mortgage, which was then our lowest-ever rate to date."

Other mortgage lenders to have chopped their rates in recent days include Nationwide Building Society, which yesterday made a series of rate reductions across its mortgage range, reducing selected fixed rate deals by up to 0.30per cent.