Yorkshire Building Society has launched a range of mortgage deals specifically for borrowers with modest deposits – and they lead the market, with uber-low interest rates.

The mutual has reduced its 95% loan-to-value (LTV) two-year fixed rate mortgage to 3.15%, the lowest currently available in the mortgage market for buyers with just 5% upfront, with an added benefit of £250 cashback to borrowers on completion.

Buyers and remortgage customers with a slightly larger 15% deposit can also bag a market-leading two-year fixed rate mortgage at 85% LTV at 1.32%.

Both deals come with a £995 product fee.

Charles Mungroo, mortgage manager for Yorkshire Building Society, explained the latest cut to rates: “We’re committed to offering a variety of competitive home loan options to suit a range of borrowers’ needs and are proud to be able to offer the lowest rates currently available from any provider.

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“We hope our latest rate reductions will appeal to customers with smaller deposits and help first-time buyers get a foot on the property ladder.”

Rachel Springall, finance expert at Moneyfacts.co.uk, added: “First-time buyers searching for a competitive interest rate on their mortgage and who have amassed a 5% deposit will be delighted by this new deal priced at 3.15% from Yorkshire Building Society as it becomes the lowest rate currently on the high-street.

“The deal priced at 1.32% at 85% LTV will likely cause a stir with numerous borrowers thanks to its market-leading rate, particularly those looking to remortgage with a trusted brand. As with any deal, applicants must work out the overall true cost of the mortgage by taking the fees and incentives into consideration before entering any arrangement.”