As an alternative, certain new customers can choose to have their arrangement fees reduced substantially rather than opt for the free cover. Borrowers transferring their mortgage to either bank from another lender can choose £1,000 worth of free buildings and contents insurance or opt for a £500 discount off their arrangement fee.

The offer is available from today, Monday 18th January to 28th February. Free home insurance could be particularly attractive at this time of year. M&S Insurance revealed last week that the wintry weather which has plagued the UK in recent weeks has driven up claims for water damage alone by 200% compared to the summer.

Yorkshire Bank and Clydesdale Bank have also cut the rates charged on some of their deals. Both banks, owned by National Australia Bank (one of the lenders in the running to buy the ‘good’ bank of Northern Rock) have cut the payment rate on their two-year fixed rate, available up to 75% loan to value, from 4.49% to 4.19%, and a similar five year fixed rate from 5.79% to 5.49% as of today.

Commenting on the special offer, heads of retail at Yorkshire Bank and Clydesdale respectively, Gary Lumby and Steve Reid, said: “This new offer is another example of Yorkshire Bank’s commitment to continue lending. “By combining a range of competitive remortgage and home-mover products with up to £1000 of free insurance or £500 towards arrangement fees we’re offering great value and choice.”