The Council of Mortgage Lenders (CML) has confirmed that there has been an increase of 49% in popularity for Offset mortgages over the last year. It has been said that approximately 170,000 Offset mortgages were taken out last year, which are worth around £30bn in total.
An Offset Mortgage allows users to keep balances in different accounts with all balances being offset against each other. Possibly allowing a reduction in the interest paid, which could allow the borrower to repay the mortgage early. They are designed to be flexible, allowing the user to make over- payments and under-payments.
When introduced in the UK in the mid 1990’s from Australia, Offset Mortgages proved to be initially popular and were heavily marketed by Building Societies and Banks. There popularity was diminished with more competitive fixed Rate Mortgage deals. However, recent changes in interest rates have shown that Fixed Rate Mortgages have become increasingly expensive, thus taking a back seat when compared with Offset Mortgages.
The change in interest rates, according to experts has encouraged buyers to choose Offset Mortgages and it is thought that after more than a decade the Offset Mortgage approach has quietly contented the public’s expectations.
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