Lender First Direct has claimed that mortgage borrowers could save themselves thousands of pounds by taking out an offset product rather than a savings account.

According to First Direct, over the past two years UK offset mortgage borrowers have earned £1.4bn more on their savings than those who put their money in best buy savings accounts.

The lender's customer data shows that the estimated 460,000 offset mortgage borrowers in the UK have made a total 'return' of £1.9bn over the last two years, compared with £534m in cumulative net interest if they had alternatively invested in the equal best buy savings accounts.

Richard Tolchard, senior mortgage product manager at First Direct said: " An offset mortgage is an excellent option for those borrowers looking to benefit from a higher rate for their savings"

He also said that while many savers are seeing the value of their funds eroded by inflation and being taxed, no tax applies if they use the money to reduce the interest on their mortgage with an offset deal.

He added: "In the current interest rate environment mortgage borrowers could have saved thousands more with an offset in the last couple of years, even if they had diligently been seeking out the best buy savings rates."