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first direct sees its share of offset mortgages grow

26th October 2010 Print

According to the Council of Mortgage Lenders (CML) offset mortgages made up almost 11% of new mortgages sold in Q2 2010, versus 8.5% in 2007, perhaps due to the current low Base Rate climate, where an offset mortgage can make savings work harder.

first direct has increased its outstanding offset mortgage balances by over £10.5 billion in the last three years, seeing its market share of offset mortgages sold grow from 4.5% in 2007 to 22.2% by Q2 2010.

A recent survey carried out by the online bank further illustrates how more people are becoming aware of offsetting.  The poll found that on average 64% of mortgage payers have heard of offset mortgages.

The typical Offsetter now has savings equivalent to 20% of their mortgage borrowing. So a homeowner switching to a first direct Offset Tracker mortgage, tracking 2.09% above the Bank of England Base Rate (currently 2.59%) for the life of the loan, could cut down the length of a £150,000 mortgage by close to three years (33 months), and save £18,342 in interest payments over its lifetime.

On top of the savings benefits first direct offset mortgages also have the following key features:

the flexibility to make unlimited overpayments in either lump sums or regular payments

availability to move the mortgage to a new property

ability to redraw funds at the same rate throughout the term of the mortgage

Richard Tolchard, Senior Mortgage Product Manager at first direct commented: "At a time when we need to make more of our savings, Offset really can make a difference by enabling customers to get up to 4.40%AER gross on their savings as well as a great mortgage rate. We've always known how great the offset mortgage product is, so it's pleasing to see that the public are starting to realise it too.

"For those with savings and need of a mortgage an offset really is a no brainer!"