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Offset and save £18,000

18th May 2009 Print
As homeowners adjust to shrinking returns on their savings, research reveals uptake of offset mortgages is on the rise. New offset lending rose 16 per cent in the last three months of 2008.

Findings from first direct show swapping to an offset mortgage could cut down the length of a £100,000 25 year mortgage by almost three years (33 months), and save £18,322 in interest payments over the lifetime of the mortgage.

Many home-owners do not understand the benefits of offsetting - just two in 10 (21 per cent) see offsets as a way they can save money on their mortgage. And close to half (48 per cent) admit they don't understand the basic principle.

first direct spokesman, Jimmy Kelly, said: "Our research shows offset mortgage lending now accounts for £1 in every £10 being lent to UK mortgage holders, and is on course to reach a record share of new mortgage lending in 2009.

"More and more savvy savers are starting to see their potential, helping them make the most of their savings pot, and forcing their money to work much harder."

In the past three years 400,000 new offset mortgages have been issued, taking the amount of UK home-owners with an offset mortgage to 1.1 million.

Offset mortgage trends

first direct's research reveals some interesting offset mortgage trends.

There has been a sharp increase in uptake over recent years - more than 400,000 new offset mortgages have been issued in the past three years, and more than 450,000 since the beginning of 2006

The total value of offset mortgage lending has trebled since 2005

The share of new mortgage lending for offset mortgages increased by 16 per cent in the final quarter of 2008, and looks set to continue rising

At current rates of increase, offset mortgage lending will reach record levels during 2009
Offset mortgages account for 10 per cent of the value of new mortgage lending during the past year