According to Barclays own data the average Woolwich offset mortgage stands at £132,000 and customers are keeping an average £21,000 in their savings and current account. By offsetting the savings against the mortgage customers are on track to pay off their mortgage around three years earlier.
To mark the 10th anniversary of offset, Woolwich mortgages is cutting the rate of its current offset deal by 40 basis points [from 3.49 per cent (base + 2.99) to 3.09 per cent (base + 2.59)].
Andy Gray, head of mortgages for Barclays said: "Offset mortgages stimulated a new approach to the way people have borrowed money over the last 10 years, previously people treated a mortgage as a 25 year commitment, now people are knocking years off their mortgage, saving them masses in interest.
It's not surprising that offsetting has caught on, the concept is brilliantly simple. People just manage their current account, savings and mortgage separately as they have always done and in the background all the components are added together every day, to save people interest and pay off their mortgage earlier.
"And the beauty is that these types of mortgages really benefit tax payers, whether you are paying 20, 40 or 50 per cent tax the equivalent gross rate of return on savings ranges from 3.61 to 5.78 per cent. Anyone paying tax will be keen to limit the impact of tax and inflation. Many customers with savings also want to keep them accessible rather than commit them to a long term bond or a traditional mortgage where you have to overpay, with offset the money is always on-hand but cutting the mortgage interest automatically."
Woolwich offset mortgages have the advantage, unlike some competitors, of being linked to both a Barclays current and Barclays savings accounts which means that customers can continue to operate their accounts as normal. Customers also have an extensive network of branches, telephone, online or mobile phone banking to manage their accounts.
Over the last 10 years the offset mortgage market has steadily grown in the UK. The average number of offset accounts taken out by borrowers each year since 2005 is around 100,000 according to CML data.
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