Cambridge Building Society has launched a new first-time buyer mortgage to 95% that charges just 3.99% in the first year.
That is a full percentage point below the cheapest loan currently available under the second phase of Help to Buy, a two-year fixed rate from RBS/NatWest charging 4.99%.
And it is 1.5% below the RBS/NatWest five-year fix, which charges 5.49%.
The new Cambridge rate will only strengthen suspicions that rates currently announced under Help to Buy are a rip-off that make a mockery of the scheme.
The mortgage is a 'stepped' three-year deal, with the rate increasing to 4.89% in years two and three.
That is still competitive for borrowers with small deposits, equalling the two-year fixed rate from Hanley Economic Building Society, which charges 4.89% to 95% LTV.
The Hanley deal is available to both first-time buyers and existing borrowers.
Clydesdale & Yorkshire banks offers a three-year fixed rate for first-time buyers charging 4.99% to 95% LTV, with no arrangement fee.
Hinckley & Rugby Building Society offers a two-year discount mortgage at 5.09% to 95% LTV, with fees totalling £990.
These deals are all outside Help to Buy, with lenders using their own insurers to guarantee the loan, rather than the government.
Cambridge says reduced monthly payments in the first year will give homebuyers a helping hand when they need it the most. It also includes a free valuation and low application fee.
Andy Lucas, commercial director at The Cambridge said: “This stepped rate product is great for those people who have a smaller deposit and would benefit from having smaller monthly repayments in the year.
"Buying a house isn’t just about the deposit – it is about the whole package and we have looked at each area to ensure that we provide an overall proposition for the customer.”
The Society also offers a two year fixed rate 95% mortgage product at 5.39% and a range of 90% LTV products for those people who have a slightly larger deposit.
Cambridge takes a flexible approach to its mortgage lending, looking at each individual case on its own merit.
It lends within the following counties: Cambridgeshire, Norfolk, Suffolk, Essex, Hertfordshire, Buckinghamshire, Bedfordshire and Northamptonshire.
For existing members and families, it will lend across England and Wales.
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