Clydesdale Bank and Intelligent Finance (IF) are among the first lenders to make the cuts, which commentators say will result in a great deal of movement in the offset market as others follow.
The Clydesdale, owned by the National Australia Bank, has announced two and five-year fixed rate products available as offset and non-offset with no differential in the rates.
From 4.65 per cent for the two-year fixed rate and 4.75 per cent for the five-year fix with switching package, they are in line with current mainstream rates. Therefore for the first time clients are not charged extra
for offset options.
Kevin Lilley, head of national accounts for Clydesdale Bank’s third-party distribution team, said: “We have launched these products to demonstrate the value of the offset mortgage in the marketplace.
“For a while offset pricing has been higher than the mainstream and so we have taken the opportunity to align this and prove the benefits of offsetting to our customers.”
IF has also taken advantage of lower borrowing costs and, in a move which the bank described as a ‘triple bonus for brokers’, slashed arrangement fees, removed all early repayment charges and reduced rates on many offset mortgages.
With many commentators predicting that interest rates have peaked, all IF offset mortgages are being offered as tracker products.
Despite lenders including Accord and Bristol & West offering increasingly competitive offset rates, some experts believe the market has been startled by the cuts from Clydesdale and IF.
Ray Boulger, senior technical manager at John Charcol, said: “Although there are few lenders in the offset fixed rate market, I suspect they were taken by surprise at Clydesdale’s move.
“It’s early days for other companies to react but with Clydesdale upping the ante and bringing offsets closer to mainstream rates, other lenders should soon follow suit.”
