An offset mortgage allows a borrower to link their current, savings or deposit accounts to their mortgage, so that the positive account balances are offset against the mortgage resulting in a reduced interest payment.

The rising demand for offset deals is reflected in figures from the Council of Mortgage Lenders’ (CML), which show that offset mortgages made up almost 11% of new mortgages between April and June 2010 compared to 8.5% three years ago.

Your Mortgage Decisions claimed this trend will continue, especially if the base rates stays at its historic low.

Dominik Lipnicki, director at Your Mortgage Decisions, said that the popularity of offset has grown as increasing numbers of borrowers have had to think more holistically about their financial situation and the long-term value of particular mortgage products.

He said: “It is fair to say that borrowers have become better educated on how best to manage their finances in order to keep the potential costs of interest rate exposure down and this is in no small part down to the quality of advice being administered.

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“Offset is not, and will never be, a product that is suitable for everyone as it requires an element of financial discipline and obviously applies to those with a decent level of savings but this level is not generally as high as most people think.”