Concern over offset sales

Concern is mounting that borrowers are being advised to take out offset mortgages despite the product not being suitable for them.

Some brokers have commented that consumers going direct to lenders are being &#39blinded with science&#39 and being advised to take out offset deals regardless of their circumstances.

Ruth Whitehead, principal of London-based Ruth Whitehead Associates, fears people are being recommended to take the product because it is the flavour of the month and is very hyped.

She says: “We&#39ve found that clients who have previously gone direct to the lender have been put on these deals when they never should have been. This is particularly true of Intelligent Finance. Too many people are paying more interest just for a bit of flexibility and are struggling with payments.”

She adds: “Young first-time buyers have been told that offset deals are a good option for them. It&#39s simply ridiculous. Lenders must stop marketing the product so aggressively.”

Ray Boulger, senior technical manager at Charcol, says: “I agree that offset lenders can blind consumers with science but a major problem is that some brokers don&#39t understand how the products work.”

Matthew Wyles, development director at Portman, says; “We&#39ve thought this for a while. If you calculate the cash you would need to deposit in an offset deal compared with a two-year fixed or discount deal, the offset would not be appropriate for nine out of 10 borrowers. Most consumers would expect to reduce their mortgage rather than hold so much cash.”

Jennifer Blackwood, spokeswoman for IF, says: “Over 70% of IF&#39s mortgage business is placed by advisers so it is clear that most consumers seek advice when taking out a mortgage.”