From 23 April the deal, priced at 0.99 per cent, comes with a £999 fee and is available to remortgage borrowers only.
To be approved for the low discount rate, borrowers are subject to strict requirements and a maximum loan to value (LTV) of 60 per cent.
In a communication to advisers, the mutual said only employed borrowers would be eligible and they must have an employment history of six months and a permanent contract, and it added that three month’s pay slips and bank statements are required as income evidence.
However, it has since told Mortgage Solutions that this part of the product criteria has not been confirmed yet.
The minimum loan is £150,000 and the applicant can have no credit issues.
The mortgage must be on a capital repayment basis, and while capital raising is allowed it cannot be for debt consolidation or business purposes.
Moneyfacts has confirmed it is currently the lowest mortgage interest rate on the market. The next lowest interest rates, all at 60 per cent LTV, are:
Platform: 1.06 per cent fixed for two years, for purchases and remortgaging
Cumberland BS: 1.08 per cent discounted variable rate for two years, for remortgaging only
NatWest Intermediaries: 1.08 per cent fixed for two years, for remortgaging only
Chris Sykes, associate director of Private Finance, said: “We previously saw rates like this when the base rate was 0.25 per cent, so with it now at 0.1 per cent this is a fantastic step in the right direction and we hope other lenders follow suit.
“We see this as Hinckley and Rugby having real faith in the market and pitching for that really competitive high quality low LTV clientele that lenders like to have on their books to lower the overall risk of their lending proposition.
“I am intrigued to see if any lenders will follow suit, and if anyone would be offering this on a fixed rate rather than a discount variable.”