The mutual society has also reduced the cost of its five-year fixed rate to 2.59%.

Each mortgage is available up to 65% loan-to-value and has a product fee of £295.

Norwich & Peterborough product manager Richard Barker said:

“Our low-fee mortgages have been proving especially popular with borrowers in recent months.

“In addition to best buy rates, these latest fixed rate deals come with incentives such as a free valuation and either free legal assistance or £200 cashback.”

On rate, the mutual is yet to beat Chelsea Building Society’s two-year fixed rate mortgage at 1.64%. However, the Chelsea offering includes a £1,545 product fee.

Moneyfacts finance researcher Rachel Springall said:

“It’s great that N&P BS have slashed the rate on its two-year fixed deal. “With a low rate of 1.99%, a fee of just £295 and an incentive package for both house purchasers and those remortgaging, it’s a good combination. It bucks the trend of high fees, low rates.”