The intermediary-only lender, which is part of the Yorkshire Building Society Group, is offering house purchase and remortgage customers a choice of 75%, 80% and 85% loan-to-value (LTV) offset mortgages over a five-year term.
The new range includes a 2.49% offset at 75% LTV. For those looking to borrow more, there is a 2.59% option at 80% LTV, and 2.69% at 85% LTV. Each mortgage comes with a £995 product fee.
David Robinson (pictured), national intermediary sales manager at Accord, said offsets are becoming more popular. “The demand for offset mortgages is increasing, especially as savings rates are offering such low returns.
“Offsets can be a great option for all types of borrowers, particularly those with a large amount of savings and people with irregular incomes or who benefit from bonuses. Higher and additional tax payers can also benefit from an offset, as they will avoid paying tax on interest earned on their savings,” he said.
Rachel Springall, finance expert at Moneyfacts, agreed that “dire” savings rates make offset mortgages a good choice for borrowers with surplus cash.
“These new deals from Accord are competitively priced in the market, where five-year fixed rates at 75% loan-to-value with an offset facility start at 2.24% from Yorkshire Building Society with a £995 fee.
“Next up is a deal from Chelsea BS priced at 2.25% at 75% LTV. It has a higher fee of £1,695 but does come with an incentive package of free valuation for all borrowers, free legal fees for those looking to remortgage and £250 cashback for house purchase customers,” she said.
Springall said the higher LTV products are also a welcome development. “At 80% onwards the five-year fixed market doesn’t have many offset deals, so it’s fantastic to see some competition for borrowers with a smaller deposit or equity and is looking to save some cash by choosing an offset deal.”
Scottish Widows was previously the lowest rate available up to 85% LTV – at 2.89% with a booking fee of £1,499.
Ray Boulger, senior technical manager for broker John Charcol, said Accord is “one of a tiny elite band of lenders which offers offset mortgages on a fixed rate”.
He agreed that the high LTV rates are significant: “Borrowers who buy into the offset concept are more likely to take a longer term view and so a longer term fixed rate is likely to suit many offset borrowers. The small premiums over the 75% LTV rate of only 10 and 20 basis points respectively for the 80% and 85% rates, at 2.59% and 2.69%, from Accord makes the rates for these LTVs particularly attractive,” he said.
Last month Accord made its offset mortgages manageable online, as well as by telephone or post.
“Until recently Accord’s offset functionality was very clunky and the resulting poor client experience when operating their account was often a reason to avoid recommending Accord, even if the rates were competitive,” said Boulger. “This problem has been addressed, in particular with the ability now to manage the account online, including making faster payments/CHAPS payments and setting up standing orders.”
Mark Dyason, director of EMA, Edinburgh Mortgage Advice Brokers, said: “Accord has undercut the previous market leaders and is now matching many ‘vanilla’ five-year fixes with the added benefit of offset. This added to other improvements to their offset proposition made recently it makes this an attractive deal.
“Higher loan to value offset is a great product for those starting out but with incomes likely to increase over the next few years – these are just the sort of clients that Accord likes so a great refresh that is likely to attract strong business.
“The question is if you are likely to gain funds to offset over the medium term are you better with a shorter term rate and then remortgage at a lower LTV?”
