Brokers have had to contend with decreasing numbers of offset deals to choose from in recent years.
According to Moneyfacts there are currently 203 offset mortgage deals available, down from 208 at this point last year. The fall is even more stark over a longer period though ‒ five years ago there were 312 deals to pick from.
And advisers have called on lenders to broaden the range of deals open to clients with under-performing savings pots.
Look at the example of equity release
Stuart Powell, managing director of Ocean Mortgages, said that offsets were an amazing product but that he wished more lenders included them within their range, picking out Accord and Scottish Widows as being particularly good in this area.
Powell added that he regards his job as helping people get a mortgage that suits their circumstances best and helping them to pay it back as soon as they can, and argued that understanding and using the facilities offered by an offset deal can “enable them to reduce the term and interest paid dramatically”.
“I hope that more lenders introduce these in the near future. I have asked BDMs to introduce these to their range but have been told there isn’t the demand for them. They used to say that about equity release, but the more lenders that enter that market, the more the market grows.”
A massively underused product
James Mole, managing director of London Belgravia Wealth Management, argued that offsets are “massively underused”, and called on more lenders to enter the market as “there is only a few to choose from”.
He added: “I’ve had clients in the past looking to release equity to make a buy-to-let investment, and it’s made sense to take the extra borrowing from the lender and then hold it within the offset account until they have use for it. The client ultimately changed their mind so they saved a fortune in interest payments on cash they didn’t even need.”
Stuart Gregory, managing director of Lentune Mortgage Consultancy, agreed that offsets can be particularly useful when borrowers have savings which “are not performing as well as they would hope”, and highlighted Coventry Building Society and Scottish Widows Bank as being “particularly effective”.
Serving a small niche
However, Andy Wilson, founder of Andy Wilson Financial Services, suggested that offset deals were a niche product which do not hold much appeal to borrowers who are not self-employed.
He explained: “Most clients with spare savings will either use them to take a smaller mortgage or will have committed them to something else, such as home improvements. Very few clients actually ask about offset, and very few we mention the option to are suited to it.”