TAKE out a new mortgage for an old penny. That is the offer being made to borrowers this week by the National & Provincial Building Society in the UK.

To mark the 25th anniversary of decimalisation, it is offering loans with interest of just one old penny per month for the first six months.

The total interest bill for the first half year will total six old pence just 2.5p. After that borrowers will switch to N&P's standard mortgage rate, currently 7.54 per cent.

The idea is the latest gimmick from lenders fighting fiercely for business in the depressed British property market, where the battle in recent months has been to poach customers from other banks or building societies.

Other lenders have offered cashbacks of up to £6,000 and initial interest rates of only 0.25 per cent, while one mortgage broker was giving away a car to new borrowers. With a free valuation included in the N&P deal, a £60,000 borrower would save more than £2,250 in six months.

"Even in February 1971, mortgages were never this cheap," said the Bradford based society's loans chief, Mr George Haslem. "Certainly, if this deal had been around in the Beatles' heyday, we might well have been singing Penny Loan, not Penny Lane."

The loan will be available through the society's branches from Wednesday.