There is an opportunity for more brokers to discuss offset mortgages after Bank of England data reveals £271bn is sat in zero interest savings accounts, according to Coventry for Intermediaries.
This figure has increased by 8.7% in the past year, which amounts to an extra £21.6bn from September 2021 to September 2022.
The data also shows the total amount of household savings stands at over £1.72 trillion.
This includes amounts held in current accounts, easy access, fixed rate bonds and cash ISAs.
Jonathan Stinton, head of intermediary relationships at Coventry Building Society, said: “As the economic landscape continues to shift, offset mortgages could become more of a talking point.
“Flexibility is a key feature for brokers to mention to their clients.
“A lot of people want stability with their mortgage and flexibility with their savings.
“There are hundreds of billions of pounds sat in zero interest accounts which could be working harder for people.
He added: “Fixed rate savings options may offer a higher return, but it’s not always going to be suitable for people to tie up their savings. An offset mortgage could be a solution.
“Borrowers can use their savings to offset the interest they pay on their mortgage, while still having access to their money.
“That could be helpful to clients who are looking to combat the effects of a high interest rate environment and maximise their instant access savings returns.
“Of course, offset may not be suitable for everyone. The rates on offset mortgages are generally higher than a non-offset alternative.
“It’s worth establishing the ‘break even’ point, to understand how much money needs to be held in savings to make the offset feature suitable.
“An offset calculator will do this for you, and the figure may be lower than expected, which could make offset a good option to explore.
“It’s these conversations which really drive home the importance of advice. Brokers are the ones who can educate their clients on offset, and then explore the suitability of them.
Stinton concluded: “At the same time, discussing offset provides brokers an opportunity to review their client’s savings plan. “This leads to a more holistic financial review, which helps cement a long-standing relationship between the client and their broker.”
