Offset exposure needed

Defaqto's recent report “Offset and Current Account Mortgages – The way forward” acknowledged that these mortgages have established themselves in certain niche areas, but suggests that they will have to widen their appeal if they are to achieve greater prominence.

An important way of doing this would be for offset and current account mortgages to be included in Best Buy tables in national newspapers. Their absence may be the result of the whole market’s fixation with initial rates, the long term nature of these mortgages and the perceived difficulty of conveying the concept of offsets in an understandable way.

David Black, head of banking at Defaqto and author of the report said: “ Offset and current account mortgages have a lot going for them and could appeal to a fairly wide section of the community. For example, they are well suited to those with some savings who do not want the hassle of changing mortgages every few years but need to know their mortgage arrangements still offer good value. Also, with the likely ending of free full service current accounts, current account mortgage and offset mortgage providers who do not impose similar charges will be able to point to this as another potential saving of an additional £120 or so a year for their customers.”