The supermarket giant will now offer a two-year fix at 70% loan-to-value (LTV) for 1.99%, with a £1,300 product fee and £195 booking fee, while the low-fee equivalent is on offer at 2.39%.

However, the lender has upped rates across all its five-year products with Tesco’s headline 70% LTV product jumping from 2.79% to 2.99%.

Other lenders operating in the sub-2% space at 70% LTV include Nationwide, which offers a 1.89% rate to existing customers, and the Post Office which offers a direct product at 1.98% up to 75%.

David McCreadie, managing director at Tesco Bank, said:

“Today’s rate changes illustrate our commitment to continually offer customers a strong choice of products from a highly competitive range.

“The new range includes some great products including our most competitive 85% LTV mortgage yet.”

Last week figures revealed the fledgling lender had increased its mortgage lending by 77% during the last six months.