By Graeme Salt
Incorrectly set-up offset accounts may not be reducing your interest payments.
That is the conclusion of research by the Australian Securities and Investment Commission (ASIC) which found that banks had recently had to pay $55 million in customer compensation for offset account failures.
ASIC reviewed the offset practices of eight banks, representing more than 70 per cent of Australia’s $2.5 trillion home loan market.
While practices varied significantly across the banks, ASIC found weaknesses in how all banks set up, monitored and managed offset accounts, resulting in some customers missing out on promised savings.
ASIC reviewed data for 204,000 loans and found many were incorrectly set-up.
Offsets are savings account which are linked to a mortgage. The savings balance offsets interest charges accrued by the loan balance.
Almost 3.3 million Australian households have a mortgage, and Australians held about $349.1 billion in offset accounts as of March 2026, up 28 per cent over the last two years.
The most challenging reality of this problem is that it’s hard for people to see it and know that it’s not working. Most people set up their loan repayment amounts based on their minimum payment requirements. These are usually set by the loan amount, terms and interest rate, not by how much they have to pay when the offset balance is taken in.
So the amount leaving your account each month doesn’t usually change when an offset account fails – making the failure almost impossible to notice.
To be sure your offset has been set-up correctly, your first action should be to go online and establish that your offset:
- has even been set up
- is linked to the correct home loan, and
- is receiving the benefit of saving interest.
If you are still unsure, the next calls must be to your bank or broker.
Graeme Salt is an award-winning mortgage broker. For a no-obligations consultation on your home loan needs, please contact him on 02 9922 5055.
