What is the incentive for banks to offer offset mortgage accounts?

An offset mortgage is a mortgage type where your mortgage account is linked with a savings account in the same bank and the interest is only charged on mortgage balance after deducting the money available in your savings account, allowing you to pay less each month or pay off your mortgage faster.

If you have £20,000 in a savings account connected to a £300,000 offset mortgage, for example, you will only pay interest on £280,000.

This is in contrast to a traditional mortgage, where your interest payments are calculated based on the entire amount owed. An offset mortgage might save you hundreds of pounds in mortgage interest payments over the life of the loan. This kind of mortgage is beneficial for self employed people or people who have regular savings.