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Downward trend in offset rates has further to go, say brokers

  • 05/10/2016
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Downward trend in offset rates has further to go, say brokers
Fixed rates for offset mortgages have trodden a steady downward path over the last three years making them a competitive option for those with savings, figures released by reveal.

Between October 2011 to October 2016 the average offset fixed rate fell from 4.03% to 2.30%.

Finance expert at, Charlotte Nelson, said that with such encouraging rates, it gave providers a way to stand out in the market and offer a diverse range of mortgages at good prices.

She said: “An offset mortgage is the ultimate flexible product, as it allows borrowers to reduce the interest paid on their mortgage while simultaneously having instant access to their savings pot.

“Despite the personal savings allowance firmly in place the tax benefits of an offset mortgage is still a consideration for many. The reductions in the average offset fixed rate and price are only going to boost its appeal.”


Oct-11 Oct-14 Oct-15 Oct-16
Offset Average Fixed 4.03% 3.53% 2.60% 2.30%
Offset Average Variable 3.43% 3.11% 2.63% 2.71%
Source: Compiled: 4.10.16


Though rates have fallen steadily, brokers believe there is still a way to go until offset mortgages can truly compete on rate against traditional mortgages.

Dominik Lipnicki, director of Your Mortgage Decisions, said: “It is still a very niche product because not enough lenders are offering them to borrowers, which in turn is making their rates far less competitive than traditional mortgages,” said Lipnicki.

David Hollingworth, associate director communications at L&C Mortgages, said at the moment there was enough choice for customers but if more lenders showed an interest in offset, this would be only a good thing for the market and encourage better rates.

Lipnicki said: “If by design offset mortgage had the same rates as traditional mortgage deals then almost everybody would opt for offset mortgages because it would make the rates far more competitive.”


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