A mortgage offset account can be a useful way to reduce the interest you pay on your home loan – but only if it’s working correctly.
An ASIC review has found some Australians are paying more in interest than they need to because their offset account has not been properly linked to their home loan.
You may not even realise there is a problem. Your repayments stay the same, meaning the issue can go unnoticed for extended periods.
ASIC is encouraging Australians to check their offset account is linked properly and delivering the interest savings it should.
What ASIC found in our review
ASIC reviewed eight banks representing more than 70% of the Australian home loan market and found examples of offset account failures that left customers paying more interest than they should.
ASIC found some banks:
- struggled to readily identify customer offset account requests
- were inconsistent in detecting offset account failures
- failed to compensate customers and were slow to fix issues
- did not provide customers with visibility of information on offset accounts.
In some cases, banks only became aware of offset account failures after customers made a complaint or after ASIC’s engagement.
For more information see ASIC’s Report 837 Offsets, out of mind: Banks fall short on mortgage offset account promises (REP 837).
Hypothetical case study
For example, imagine a couple borrowed $750,000 and kept an average balance of $50,000 in their offset account. However, the bank failed to link the account as requested, resulting in the couple paying more than $3,000 in additional interest over just one year. If the problem continued for the life of the loan, they could have missed out on almost $230,000 in interest savings and spent an extra four years paying off their mortgage.
Why you should check your offset account
Mortgage offset accounts are an important part of many households’ finances. As at March 2026, Australians held approximately $349.1 billion in mortgage offset accounts – a 28% increase over the last two years.
Many borrowers pay for offset features through higher interest rates, account fees, or both, so it’s crucial to ensure you're receiving the benefit you're paying for.
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.
In addition, the report found that common home loan changes – such as refinancing or switching loan products – can result in an offset account becoming disconnected from the loan.
Reports to ASIC between 1 September 2023 and 31 August 2025 show banks paid over $55 million in customer compensation for offset account failures.
How offset accounts work
An offset account is a transaction account linked to your home loan. The balance in the account reduces the amount of your loan that is used for calculating interest.
For example, if you have:
- A home loan of $750,000
- $50,000 in your offset account
- You'll only be charged interest on $700,000.
You don't earn interest on the money in the offset account. Instead, the benefit comes from paying less interest on your home loan. While an offset account does not change the required loan repayment amount, it means a greater share of each payment goes towards paying off the home loan rather than interest. Over time, this can help you pay off your mortgage sooner and reduce the total interest you pay.
How to make sure your offset account is working
- Check your offset account is linked properly. Make sure it is linked correctly through your bank’s mobile app, online banking or bank statements. Don’t assume it’s working just because you have requested one from your bank.
- If you’re unsure or can’t see your interest savings, contact your bank. Check that you’re saving money overall by having an offset account. If the savings aren’t shown in your app, online banking or statements, ask your bank.
- Check whether your offset account requires relinking when your loan changes. Refinancing or switching home loan products can break the link, so be sure to check your offset account still works afterwards. You may need to contact your bank to re-link it.
- Act quickly if something looks wrong. Offset account failures can cost you money, so contact your bank and ask questions if something doesn’t look right, is unclear, or you’re just not sure how it works.
What to consider before applying for an offset account
An offset account may be worth it if you:
- have a large loan
- keep a regular savings balance, and
- want flexible access to your money.
It may not be worth it if:
- you usually keep a low balance in the offset account
- the loan has higher fees to include an offset feature, and
- the interest rate is higher than similar loans without an offset account.
Before you choose a loan with an offset account, consider:
- the interest rate – would it be lower if you didn’t select an offset eligible loan?
- any annual or package fees you’ll be charged for an offset eligible loan
- any monthly fees for the offset account
- how it compares with a redraw facility and whether a redraw facility might be more suitable.
Even small differences in interest rates and fees can add up over time, so compare your loan and features whenever your situation changes.
The bottom line on offset accounts
Offset accounts can save borrowers significant interest over time, but only if they're set up correctly and continue working as intended. ASIC's review found that some customers were unknowingly missing out on savings because some banks failed to properly manage offset accounts.
If you have an offset account, take a few minutes to check it's linked to the right home loan, delivering interest savings and still working after any recent changes to your mortgage. If the information is not available, you should raise it with your bank.
ASIC is Australia’s corporate, markets and financial services regulator.