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Derin Clark

Derin Clark

Online Reporter
Published: 28/04/2020

Despite the number of offset mortgage products available in the market falling by more than half in the last 12 months, average rates have fallen, making these types of mortgages highly competitive.

Our research found that in the last year, the number of offset mortgage products have fallen by 115, from 210 in April 2019 to just 95 available today. At the same time, the average two-year fixed rate on an offset mortgage has fallen from 2.10% in April 2019 to 1.90% today, while the average five-year fixed rate has fallen from 2.35% to 1.96%.

This is good news for consumers considering an offset mortgage, especially as savings rates continue to fall. Usually, offset mortgage rates are higher than those offered on standard mortgage products, but the fall in rates over the last year means that they now compare very favourably against the average two and five-year rates for standard mortgage products, which are currently 2.11% and 2.37% respectively.

Offset mortgage market analysis 

Offset product count and average rates April 10 April 15 April 19 Today
Offset product numbers (fixed and variable) 144 341 210 95
Offset average two-year fixed rate (all LTV's) 4.90% 2.64% 2.10% 1.90%
Offset average five-year fixed rate (all LTV's) 6.19% 3.67% 2.35% 1.96%

Source: Figures shown are as at first working day of month unless otherwise stated. 

What is an offset mortgage?

An offset mortgage allows borrowers to link their mortgage and their savings together, which reduces the interest paid on their mortgage, while still enabling them to maintain access to their savings. The reduction on the interest paid on the mortgage depends on the size of funds in their savings account, however, in return for lowering their mortgage rate, they do not receive any interest on their savings.

Commenting on the fall in offset mortgage rates, Eleanor Williams, finance expert at, said: “As savings rates continue to fall, and with the current circumstances meaning they are likely to continue doing so for the foreseeable future, getting a decent return on any nest egg may seem a distant dream for many. However, one alternative way of utilising savings funds that may be due a resurgence is the option of an offset mortgage product.

“With rate margins so low, mortgage providers are keen to show that they offer a diverse range of products to appeal to as many borrowers as possible. While the number of offset deals available has reduced over the last 12 months, the rates themselves now seem to be keeping pace with the competition we have seen across the wider, mainstream mortgage market.

“Traditionally, offset mortgage rates were significantly higher than their standard counterparts, but this no longer seems to necessarily be the case. The average two-year fixed rate offset deal continues its downward trend and now comes in below 2.00% at 1.90%, while the average five-year fixed rate offset product sits at just 1.96%. Some consumers may now benefit from exploring whether it is worth making the switch over to combine their savings and mortgage.

“Once on the property ladder, the main aim for many is to pay their mortgage balance off as quickly as possible. As a general rule, if a borrowers mortgage rate is higher than the interest rate they are currently earning on their savings, then they may find that they can save more by repaying their mortgage than they would receive in savings interest, particularly if they pay tax on the latter.

“Those who think they may benefit from an offset mortgage deal should consider their next steps carefully. Seeking independent financial advice could be invaluable in ensuring they select the right option for their circumstances.”


Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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