According to a recent report by Datamonitor, there has been a growth in popularity of offset and current account mortgages. In 2000, the current account mortgage and offset mortgage market was worth around £4.2 billion, but by 2004, this figure had risen to £29.2 billion, at an average yearly growth of 632%. They believe that this type of markets value will increase to £84.7 billion by 2009, at which point it will represent almost one third of the entire lending market. The survey found that borrowers with a mortgage of £100,000 to £150,000 are twice as likely to use offset mortgages compared to other policyholders, and 44% of people planning to take out a mortgage or re-mortgage in the next two years are planning or considering using an offset mortgage.
Our view
People do have more ready realiable cash and are looking at ways to maximise the interest they receive on the savings - if savings rates are only 3% then why not consider offsetting the amount you have saved against the amount that you owe - this can mean a real rate of return on your savings of the reduction in interest in that you pay on your debt - around 4.5-7% pa. Learn more about types of mortgage in our mortgage website.