The HSBC bank is trying to gain an even larger share of the mortgage market by launching a new deal at just 1.99% for borrowers with a 40% deposit.

The low rate lasts for two years and is set at a 1.95% discount to the bank’s standard variable rate of 3.94%.

HSBC was the largest lender in the UK in the first half of this year.

Its deal is a sign of the continued easing of the mortgage market which currently has 1,676 deals available, more than at any time this year.

The deposit required to buy a home has increased sharply over the past year as lenders have rationed their funds.

The financial information service Moneyfacts says 27% of new mortgage deals require a deposit of 40%. A year ago that figure was just 7%.