The lender has also reduced rates on a selection of fixed-rate products to keep it near the top of the market.
Tesco Bank’s two-year tracker at 0.98% is available for home purchases at up to 60% loan-to-value (LTV) with a £1,495 product fee.
Rate cuts will also apply to a variety of two, three and five-year fixed rate loans. Some are available for home purchases, others for remortgages.
Over the last few months Tesco Bank has aimed to keep its rates just behind the market leaders.
Moneyfacts confirmed these changes to fixed-rate products put it just behind the cheapest deals but told Mortgage Solutions that these could also prove attractive to borrowers where they came with no fee.
In April, Yorkshire Building Society launched the lowest ever mortgage rate for direct customers – a two-year discount variable at 0.89%.
The new rates include:
0.98% for the 60% LTV two-year tracker with £1,495 product fee
1.92% for the 60% LTV fixed for five-years with no product fee
2.12% for the 75% LTV fixed for five-years with no product fee
Tesco Bank managing director David McCreadie said: “We are pleased to introduce our new reduced rates on a selection of our two-, three-, five-year and tracker mortgage products to help customers buy or remortgage their home.
“Alongside our competitive rates, we also offer customers the unique added benefit of collecting Clubcard points on their mortgage repayments.”