According to research carried out by moneysupermarket, the product can be an "excellent option" for those borrowers with savings of at least 12,500 pounds "as the overall debt is reduced and consequently the amount of interest applied to the reduced loan". Under the scheme any money held in a savings or current account is offset against that owed on a mortgage. The price comparison website claimed that could help consumers negate any pressure placed on their finances should the Bank of England decide to increase the base rate in the near future. Findings from the company also revealed that by choosing an offset product homeowners who have 12,500 pounds in savings could effectively reduce their monthly mortgage payment from six per cent down to 5.5 per cent.

Louise Cuming, head of mortgages for moneysupermarket, said: "Taking a holistic view to mortgages and savings can be a much more effective way to manage borrowing. Though they may not realise it, many households looking for a new mortgage would be better off with an offset mortgage, yet offsets still only account for a minority of the market."

Despite Ms Cuming indicating that offset mortgages are becoming increasingly popular and that more borrowers will be "converted" in the future, she pointed out that most consumers currently tend to opt for "what they understand - cheap short-term deals". As a result, those looking to choose an offset lender were advised to ensure that they have a wide knowledge of the various features behind a particular product beyond the rates of interest charged. "Offset mortgages come in a variety of shapes and sizes to suit the varied circumstances of applicants," she added.

Meanwhile, Philip Hammond, shadow chief secretary to the Treasury, has claimed that the government needs to do more to curb homeowners' increasing mortgage debts. He said: "Gordon Brown's economic legacy is one of soaring personal debt, rising interest rates and plummeting savings." Commenting on recent research from MoneyExpert indicating that nearly half a million mortgage payments have been missed over the first half of this year, Mr Hammond said: "These figures show that rising mortgage payments, combined with higher taxes and falling take home pay, are causing real financial hardship for thousands of hard-working families."

Earlier this year, a study by mform indicated that potential first-time buyers are willing to acquire increasingly expensive secured loans in an attempt to get their first foot onto the housing ladder. According to the company's survey, one in 12 consumers (3.7 million) - who aim to apply for a mortgage in three years' time - claim to be happy to borrow at least five times the amount of their annual salary. Meanwhile about half of these respondents claimed that they would be willing to take out a mortgage which is worth six-times or more of their pay. Chief executive Eamonn Rice claimed that such borrowing is now "understandable" as the average price of a home surges beyond the 200,000 pounds barrier.