You are here: Home - Mortgages - First Time Buyer - News -

Offset mortgage rates at record lows

0
Written by: Christina Hoghton
13/06/2017
The average fixed offset mortgage rate currently stands at 2.07%, its lowest ever level and a whopping reduction from 2.41% at this time last year, according to data site Moneyfacts.

An offset mortgage allows you to link your savings pot to your mortgage balance, with the savings being used to reduce the interest charged on the mortgage. Your savings will be “offset” against your mortgage balance, which means you’ll only pay interest on your mortgage minus your savings.

The financial information provider pointed out that the average fixed offset mortgage rate at 2.07% is even lower than the average fixed mortgage rate across the whole market, which currently stands at 2.30%.

Variable offset rates haven’t fallen to the same extent as equivalent fixed deals, with the current variable offset rate at 2.63%, little changed from a year ago.

However, offsets are not widely available at more expensive high loan-to-value levels, so the figure is slightly skewed. On a like-for-like basis there is a premium for an offset deal.

Limited choice

While offset rates are low, so are product numbers, when taken in the context of the wider market. Moneyfacts said that 232 offsets are currently on offer out of over 4,000 products in total.

“Savers have been hit from all angles recently, and rising inflation is just a further blow,” said Charlotte Nelson, finance expert at Moneyfacts. “With inflation eroding savers’ funds it is little wonder they are looking elsewhere to put their cash to better use, and using an offset mortgage could be just that.”

Offset mortgages are best for borrowers with a significant savings pot added Nelson. “With savings rates low it makes sense for those with a mortgage to utilise their cash savings within an offset facility to pay off substantial sums on their mortgage and become mortgage-free quicker than planned, and unlike with overpayments, borrowers can access the cash whenever it is needed.”

See YourMoney.com’s Offset mortgage guide for more information.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
2346482-purse-squeeze
Inflation squeeze means households need to find an extra £790

UK inflation jumped to a new four-year high of 2.9% in May, putting further pressure on financially squeezed households.

Close