The Co-operative Bank has launched the UK’s lowest-ever two-year fixed rate at 1.09%.

It is available directly from the bank on mortgages up to 60% LTV to both new and existing borrowers and has a £1,499 fee.

The bank has also launched its lowest ever 90% fixed rate, again a two-year fix. It is priced at 2.64% and has a £1.499 fee.

The mortgage war, which started last summer, has seen reignited in recent days with both HSBC and Barclays launching five-year fixed rates at 1.99%.

Rachel Springall, of Moneyfacts, is however warning borrowers of high arrangement fees and the rates they will be charged at the end of the fixed term.

In the case of the Co-op, the reversion rate is relatively high at 4.74%.

She also says that if borrowers want to move to another lender at the end of the fix, they could pay further high fees.

But she said the price war among lenders is going to rage for several more months.

The Bank of England is currently expected to maintain its 0.5% base rate until next February.