Woolwich cuts offset mortgage rate
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To mark its tenth anniversary of offset, Woolwich mortgages is cutting the rate of its current offset deal by 40 basis points from 3.49% (base + 2.99) to 3.09% - base + 2.59.
According to Barclays the average Woolwich offset mortgage stands at £132,000 and customers are keeping an average £21,000 in their savings and current account.
It says by offsetting the savings against the mortgage customers are on track to pay off their mortgage around three years earlier.
Andy Gray, head of mortgages for Barclays says: “Offset mortgages stimulated a new approach to the way people have borrowed money over the last 10 years, previously people treated a mortgage as a 25 year commitment, now people are knocking years off their mortgage, saving them masses in interest.
“It’s not surprising that offsetting has caught on, the concept is brilliantly simple. People just manage their current account, savings and mortgage separately as they have always done and in the background all the components are added together every day, to save people interest and pay off their mortgage earlier.”
He says the beauty is that these types of mortgages really benefit tax payers, whether they are paying 20, 40 or 50% tax the equivalent gross rate of return on savings
ranges from 3.61 to 5.78%.
He says: “Anyone paying tax will be keen to limit the impact of tax and inflation. Many customers with savings also want to keep them accessible rather than commit them to a long term bond or a traditional mortgage where you have to overpay, with offset the money is always on-hand but cutting the mortgage interest automatically.”
Woolwich offset mortgages are linked to both a Barclays current and Barclays savings accounts which means that customers can continue to operate their accounts as normal.
