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TODAY'S OTHER NEWS

Offset mortgages fall to five-year low

The number of offset mortgage deals on the market has fallen to a five-year low, new research suggests.

And the decline is likely to continue, with some lenders now pulling their offset products.

Offset deals were originally seen as a great way to reduce the size of an outstanding mortgage but new research from Moneyfacts.co.uk shows they have fallen out of favour.

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Charlotte Nelson, finance expert at the site, said that offset products have been hit by the poor state of the savings market.

“Providers just do not need the extra cash from savers, and the savings linked to offset mortgages are no exception."

Nelson said the new personal savings allowance coming into place in April may make the offset mortgage redundant for many borrowers, particularly if they had previously opted to escape tax on their savings interest.

“The new rules will mean that savers can earn £1,000 tax-free and many borrowers may find their savings are better kept elsewhere.”

Offset deals are also more expensive, with the lowest two-year fixed rate currently priced at 1.15%, which is 22 basis points below the lowest two-year offset.

Nelson added: “Current trends in the savings and mortgage markets are likely to lead to the steady diminishment of offset mortgages, which means that a flexibility once enjoyed by many may gradually disappear, with mortgages becoming more rigid as a result.”

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