The direct-only product represents a market leading two-year fixed rate which is matched only by Chelsea’s own 1.74 per cent mortgage, launched in April.
Tesco has additionally launched a three-year fixed rate of 2.29 per cent and a five-year fix at 2.49 per cent, both up to 60 per cent LTV.
All three new products require payment of a £195 non-refundable booking fee and a £1,300 product fee.
Tesco managing director of banking David McCreadie says: “The new fixed rate and tracker products we have announced today provide outstanding value to customers. We aim to provide customers with a combination of strong rates, competitive fees and the ‘thank you’ of clubcard points, that puts us in a unique position to meet the needs of Tesco customers.”
The lender has also confirmed it has cut rates on a number of its tracker mortgages by up to 1.04 per cent.
The rate on the two-year tracker up to 80 per cent LTV is being cut by 1.04 per cent, from 3.29 per cent to 2.25 per cent, with an £800 product fee.
The rate on the equivalent product, but with a £195 product fee, has also been reduced by 1.04 per cent, from 3.79 per cent to 2.75 per cent. A non-refundable booking fee of £195 applies to both offers.