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The lender has launched a new portfolio of mortgage products, with fixed rate mortgages being reduced by up to 0.90 per cent.

From Thursday, Alliance and Leicester will offer a two-year fixed rate of 4.94 per cent, reduced from 5.79 per cent, on loans of up to 75 per cent loan-to-value (LTV).

The product will be fixed until 31 December 2010, and has a £599 arrangement fee. Also included with the product will be a 10 per cent overpayment facility and there is a maximum loan limit of £250,000.

Other new products include a two-year fixed rate of 4.99 per cent, previously 5.59 per cent, which will also be fixed until 31 December 2010.

This comes with a 1 per cent product arrangement fee and customers can borrow up to 75 per cent of the property value.

Other features of this product include a 10 per cent overpayment facility and a maximum loan amount of £1 million.

A third new mortgage to be launched by the lender is a two-year fixed rate FeeSaver reduced to 5.49 per cent from 6.39 per cent. This is for loans of up to 75 per cent LTV.

This will also be fixed until 31 December 2010 and comes with no product fee, a 10 per cent overpayment facility, and has a maximum loan limit of £1m.

The product offers a free valuation and remortgage customers get £200 cashback or the free Mortgage Transfer Service.

Richard Taylor, head of mortgage products at Alliance & Leicester, said: "I am delighted to announce these rate reductions to our fixed rate mortgage products, and I am sure they will be very appealing to customers.

"We offer a range of products with different arrangement fee levels or even no fee at all meaning customers can select the mortgage that best suits their needs."