Ray Boulger, senior technical Manager at John Charcol, commented on the launch of Clydesdale Bank's two year and five year fixed rate offset mortgages*, at 4.65% and 4.75% respectively, by saying: "The margin between straight fixed rate mortgages and offset fixes has been narrowing over the past few months. However, until now it has only really made sense for those with a volatile cashflow, probably from an irregular income, or significant amount in savings to take advantage of offset mortgages, and if they didn't need the savings to hand, it would often have made more sense to reduce their mortgage amount instead.
"Things have now changed with the launch of Clydesdale's two and five year offset fixed rates, which are in line with the cheapest bog standard fixes on the market right now, and so the offset facility is a no cost benefit. This means, for the first time, the vast majority of homebuyers and remortgagers wanting a fixed rate should be able to benefit immediately from an offset product; any savings, long term or temporarily, they then offset against their outstanding loan will represent a potentially substantial added bonus, reducing their interest cost and effectively creating a virtuous circle as, given a consistent monthly mortgage payment, the less interest they are charged the more will be the monthly overpayment.
"As ever, those with an irregular income stream such as barristers and stockbrokers can benefit most from an offset product, putting any surplus cashflow to work immediately. So for borrowers in this position and looking to fix their repayments, these new market-leading fixes are a no-brainer."