THE Bank of England's decision to leave interest rates on hold this week came as no surprise, but the longer rates are depressed, the more elusive a return on savings becomes.

The recent withdrawal by National Savings & Investments of two of its most popular products, as well as a reduction in its other rates, has reduced savers' options.

One consequence is that offset mortgages are becoming increasingly attractive for anyone who has both savings and a home loan. The policies, where savings can be used to reduce borrowers' mortgage interest costs, have become more and more mainstream since they were launched 10 years ago.

Offset deals enable home buyers to effectively earn the mortgage rate of interest on their savings. They work by combining a mortgage with one or more savings accounts and, in some cases, a current account. The borrower is then required to pay interest only on the net balance of the mortgage after the amounts in the linked savings and current accounts have been considered.

In other words, if the mortgage is pound(s)100,000 and there are savings of pound(s)10,000 available which are offset against it, interest is only payable on pound(s)90,000 of the loan. Rather than making lower interest payments, however, many people with this type of mortgage prefer to continue making repayments on the full loan so it is paid off faster.

Ray Boulger, senior technical manager at independent mortgage brokers John Charcol, says: "The key attraction of an offset mortgage is its tax efficiency. Interest received on savings would normally be subject to income but because no interest is actually received via the offset arrangement, it is very tax efficient, particularly for higher rate taxpayers. The tax treatment means that any savings in an offset account effectively produce a return at the mortgage rate grossed up at the borrower's relevant marginal tax rate."

ARGYLE midfielder Damien Johnson has signed for League One rivals Huddersfield Town on a season-long loan. The surprise switch was completed yesterday afternoon, less than 48 hours before Argyle commence their 2010/11 League One campaign. Johnson had seemed primed to be a key member of manager Peter Reid's plans for the new season. Reid had repeatedly talked about the importance of the experienced central midfield pairing of Johnson and captain Carl Fletcher. But now Johnson has moved to Huddersfield, who were beaten play-off semi-finalists in League One last term. Reid has not elaborated on the reason why the 31-year-old has been allowed to leave Home Park. But Johnson is one of Argyle's top paid players and Reid is under pressure to reduce the size of the club's wage-bill. So that could have led to Johnson's departure, only six months after signing for the Pilgrims from Premier League club Birmingham City. Johnson's move opens the way for summer recruit Anton Peterlin or Luke Summerfield to partner Fletcher against Southampton at St Mary's Stadium on Saturday. Reid said: "Sometimes circumstances dictate comings and goings at a football club, and this is one of those occasions. "Johnno has been brilliant for me since I arrived and I wish him good luck for this next stage of his career. "The lad's a terrific player and good pro but we have brought one or two people in -- Anton Peterlin has done well -- and we have got Carl Fletcher, Luke Summerfield, one or two players who can do the job in there." Johnson announced earlier this week he would be retiring from international football with Northern Ireland. He made 20 starting appearances for Argyle last season, after arriving from Birmingham, and scored two goals. Johnson's loan deal includes the stipulation he cannot play for Huddersfield against
Argyle in any league or cup games.