For an offset mortgage to be beneficial, the source said, a mortgage would have to stay with the same lender for a long period of time. As a result, intermediaries may often dismiss one offset product in favour of another suitable mortgage, so that later down the line there would be an opportunity to maintain their income stream.
He said: “The opportunity to use all the features of offset and flexible mortgages should be more than the percentage of people taking them out currently reflects. In my opinion, the market will increase 30 per cent over the next few years.”
A Woolwich spokesperson said: “Intermediaries should be recommending the best products for their clients. Offset mortgages are beneficial for people who, in the long term, have the savings which will help them pay off their mortgage. The nature of the product is that it is a long-term arrangement and you need to stay with an offset product to reap the full benefits.”
Chris Morgan, managing director at Compass Independent Financial Advisers, said: “We will always recommend the best product for our clients. If an offset deal is the best we will recommend it, regardless of the fees. This illustrates the case for paying a fee for financial advice.”
Kevin Paterson, managing director Park Row Mortgages, said: “Offset mortgages have become more popular as historically they had much higher premiums than other products. But I cannot see a connection between them and retention fees. Retention fees are an emotive issue and it is questionable whether they correspond with ‘Treating Customers Fairly’ (TCF) as a broker can very easily make a quick fee without having to give much advice. I suspect there may be some brokers tempted to do this as they can still probably justify the advice they’ve given and they can say it was easier for the client.”
