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If you are angered when you see how little your savings are making in your ISA or savings account you can find solace in an offset mortgage that will make you money in this low rate environment.
 
The best buy savings deals are being pulled on a increasingly frequent basis and the 0.5% base rate set by the Bank of England to restore economic stability twelve months ago is continuing to hit UK savers hard – and as a result the rock bottom savings rates are making savers’ lives a misery.
 
Andrew Hagger at Moneynet says: “Until base rate starts to increase, there’s no prospect of savers seeing any meaningful increases on the paltry interest returns they are currently receiving. Even when rates do start to pick up, some providers will use the opportunity to restore their profit margins and won’t pass the full benefit on to savers.”
 
“It’s understandable that people are angry and frustrated with the current situation, but no matter how much noise they make, neither providers or the government are in a position to offer beleaguered savers a quick fix.”
 
But with an offset mortgage, a low rate environment is actually beneficial. It’s like a reverse savings product – instead of making money on interest, your savings reduce your rate of interest on your mortgage, so the more you save the less you pay each month. That, of course, means you have more money in your pocket.

So don’t get angry with the current situation as rates are unlikely to rise any time soon and traditional savings vehicles are just not going to make you money. Instead, be proactive and move your money into a mortgage that doesn’t need higher rates to be a success.

SOURCE: Moneynet, 09/02/10

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