Offset market could double

The offset market has the potential to double in size in the next 10 years if it is not overlooked, says Intelligent Finance.

Offset products only represent 10% of the market at the moment but Nick Robinson, managing director of Intelligent Finance, says there is scope for that to double, potentially saving borrowers 370 a year.

Robinson says that one in four households looking for a mortgage would be better off on an offset and that this could result in nationwide savings of 850m.

With rates decreasing and the market opening up, Robinson says offset mortgages are no longer considered niche products.

But he adds there is still a misconception that a borrower must have savings worth 30% of their mortgage balance to make an offset viable, saying that the real figure is closer to 8%.

Robinson says: “I think for offset to reach 25% of the market would be hard but there is certainly scope for the sector to double in size.

“We want to make sure that more people understand offset. There is no doubt the market will grow. It’s just a question of how long this will take.”

Robinson adds that rising levels of personal debt will not affect the success of offset but admits offsetting is not always the best option for first-time buyers.

John Stewart, director at PMI Independent Financial Adviser, says that although offset products are popular with customers, many do not use them correctly.

He says: “Offset can be right for the right client but too many products are being taken out by people who do not have the financial understanding to use them correctly.

“It’s a good idea in theory but a lot of people don’t get round to transferring money between accounts.

“I’d say about one in 10 people would be better off with an offset product, not one in four.”