Britain’s biggest bank has launched the cheapest 10-year mortgage on record, as borrowers flock to long-term deals to shield themselves from interest rate rises.

Homeowners have turned to longer fixed rates in a bid to control their monthly outgoings amid the current cost of living crisis. Locking in a rate also protects households from rising interest rates, as their repayments are fixed.

Lloyds Bank has launched a decade-long loan with an interest rate of 1.66pc. Mortgage brokers said this was the cheapest on record, beating the previous market-leading rate of 1.74pc from TSB. Lloyds’ previous lowest rate was 1.99pc.

The Lloyds loan is restricted to remortgage customers who have at least a 40pc deposit, and a £1,000 fee applies. Borrowers who wish to switch away from the bank in the first five years must pay an early repayment charge of 6pc. Brokers said this exit fee was slightly above the market average. After five years this penalty decreases to 1pc on a sliding scale. 

Other banks have also reduced rates on 10-year loans. This week Halifax has cut the cost of a ten-year fix from 1.93pc to 1.68pc for new buyers with a 40pc deposit, meanwhile Leeds Building Society has launched two 10-year fixed mortgages at rates of 2.08pc and 2.14pc. Last week Virgin Money and TSB also cut their 10-year rates.

Households who have seen their energy bills and food costs rise have been eager to avoid seeing their mortgage costs increase as the Bank of England raises interest rates. The central bank is expected to implement another rise later this week, which will trigger another wave of rate increases from lenders.

Two- and five-year loans have traditionally been the most popular options for homeowners. However, the number of borrowers searching for 10-year fixed deals at the end of January was up 70pc compared to last October, according to mortgage technology firm Twenty7Tec. 

There are currently 173 deals offering interest rates fixed for a decade, according to analyst Moneyfacts, up from 126 in October last year. However, those locking in for longer will face higher rates than those taking out short-term fixes.

The average rate of a 10-year fixed deal was 2.97pc in January, Moneyfacts said, compared with 2.66pc and 2.38pc for five-year and two-year fixes respectively. 

David Hollingworth, of mortgage broker L&C, said many borrowers were taking advantage of low rates before they disappeared for good. 

“Lenders are picking up on this extra business and frankly can’t afford to not be competing with low rates,” he said. “There is a double benefit for borrowers in that they can make the most of these cheap rates, whilst also protecting themselves against further rate rises this year.”