Data from the Bank of England revealed that £271bn is currently sat in savings accounts which offer no interest. This is an 8.7 per cent rise on last year, or an additional £21.6bn when compared to September last year.
According to the central bank, households collectively have more than £1.72trn in current accounts, easy access, fixed rate bonds and cash ISAs.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said the changing economic landscape could make offset mortgages a talking point for brokers.
He added: “Flexibility is a key feature for brokers to mention to their clients.
“A lot of people want stability with their mortgage and flexibility with their savings. There are hundreds of billions of pounds sat in zero interest accounts which could be working harder for people. Fixed rate savings options may offer a higher return, but it’s not always going to be suitable for people to tie up their savings. An offset mortgage could be a solution.”
Stinton said borrowers could use savings to offset the interest on their mortgage while still accessing their money. He said this could be helpful for those trying to manage through the high interest rate environment and maximise the returns on their savings.
He added: “Of course, offset may not be suitable for everyone. The rates on offset mortgages are generally higher than a non-offset alternative. It’s worth establishing the ‘break even’ point, to understand how much money needs to be held in savings to make the offset feature suitable. An offset calculator will do this for you, and the figure may be lower than expected, which could make offset a good option to explore.
“It’s these conversations which really drive home the importance of advice. Brokers are the ones who can educate their clients on offset, and then explore the suitability of them. At the same time, discussing offset provides brokers an opportunity to review their client’s savings plan. This leads to a more holistic financial review, which helps cement a long-standing relationship between the client and their broker.”
