Offset mortgages are an increasingly attractive option for savers seeking to counter the impact of interest rate rises, research from moneysupermarket.com reveals.
As the Bank of England's monetary policy committee surprised lending industry insiders by announcing a quarter-point interest rate rise one month ahead of the schedule drawn up by most commentators, fixed rate and offset mortgages are becoming increasingly attractive compared to SVRs, which fluctuate in line with the base rate.
An offset mortgage 'offsets' the money held in a savings or current account against the money owed on a mortgage.
Savers need have only £14,000 in savings to make an offset advantageous, claims the price comparison website.
For example, homeowners borrowing £150,000 against a £200,000 home could knock their tracker rate down from 5.5 per cent to five per cent on an Intelligent Finance offset mortgage by using £13,761 worth of savings.
Moneysupermarket's head of mortgages Louise Cuming bemoans the fact that "the majority of customers tend to go back to what they understand – cheap short term deals".
But with more than 30 providers now offering offsets and competition pushing rates down, she believes that they will become more popular.To read more about offset mortgages, click here.
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