The Co-operative Bank has launched a best buy tracker mortgage in a further sign that competition is returning to the market.
The group is offering a three-year tracker loan at 2.39%, or 1.89% above the Bank of England base rate, and it has a £995 application fee.
The deal is available to people borrowing up to 75% of their home's value, bucking the recent trend for lenders to reserve their best rates for those with at least a 40% equity stake.
The mortgage goes straight to the top of the best buy tables, undercutting the lifetime tracker deal offer by First Direct, which has held the top spot for some time, by 0.5%.
All of the market leading tracker mortgages listed by financial information group Moneyfacts.co.uk are now available to borrowers with deposits of 25% or less, as lenders continue to relax their criteria.
The Co-operative bank also announced that it was reducing the cost of its fee-free three-year fixed rate mortgage by 0.2% to 4.89%, although the deal is only available to people with at least a 40% deposit.
Darren Cook, of Moneyfacts.co.uk, said the low three-year tracker rate suggested that the Co-operative was passing on recent falls in the cost of wholesale funding to its customers.
The key inter-bank lending rate, three-month Libor, on which variable rate mortgages are based, has fallen from 1.46% at the beginning of this month to 1.28% now.
Mr Cook said the fall in the Libor rate suggested that liquidity was beginning to return to the money markets, while competition among mortgage lenders also appeared to be increasing.
Figures from Moneyfacts show that the number of mortgages available for people borrowing 75% of their home's value has risen to 498 from 488 since the beginning of the month. There are now 7% more mortgages at an 80% loan to value (LTV) ratio than at the beginning of the month and 6% more at an 85% LTV.