Your Offset Account May Not Be Saving You What You Think

An ASIC investigation found $55 million was paid in compensation to customers whose offset accounts weren't working properly — here's how to check yours.

For the majority of Australian mortgage holders with an offset account, it has become a cornerstone of how they manage their loan: salaries land there, savings sit there, and spending flows through it — all with the expectation that every dollar in the account quietly reduces the interest charged on the home loan.

But a recent investigation by the Australian Securities and Investments Commission has exposed a problem: those assumptions are not always correct. Across eight banks examined by the regulator, customers received $55 million in compensation for problems involving offset accounts in the two years to August 2025.

What ASIC Found, and Why It Matters

The problems ASIC uncovered ranged from accounts not being linked correctly to the mortgage, to offsets that had never been properly established, to cases where interest charges were simply not being reduced as they should have been. In every case, borrowers were paying more interest than their account balance warranted — and in many cases, they had no idea.

Property Update, citing the ASIC findings, reports that around 55% of Australian mortgages now have an offset account, with approximately $349.1 billion held in them. That represents a record 13.2% of outstanding housing credit. Since the rate-rising cycle began in 2022, the total amount Australians hold in offsets has increased by 53%, as borrowers have looked for practical ways to reduce the financial pressure of higher mortgage costs.

The scale of the offset market makes the potential for error significant. If your account is not linked correctly, it is not saving you anything — and because the problem is not visible in day-to-day banking, it can go undetected for months or years.

The savings at stake are real. Take a $600,000 mortgage with 25 years remaining and $50,000 consistently held in a correctly linked offset, at an interest rate of 6.26%: the potential saving is more than $157,000 in interest over the life of the loan, with the loan repaid more than four years earlier. On a daily basis, that $50,000 in offset reduces daily interest on that loan to roughly $94, or approximately $2,830 across a 30-day month — compared with the higher figure you would pay without it. Across the country, offset accounts held by Australian borrowers are collectively saving an estimated $61 million in interest every single day.

Given what is at stake, the ASIC investigation's findings are a prompt to check, not to assume.

How to Check Yours Is Working Properly

The first step is to confirm your offset account is actually linked to your mortgage. Log into your bank's app or online portal and check that the offset is clearly shown as connected to the correct loan. If you have refinanced, restructured your loans, changed loan products, or opened new accounts since the offset was set up, the linkage may have been lost or reset without your knowledge. Calling the lender and asking for written confirmation is worthwhile if there is any uncertainty.

The second step is to do a rough interest check yourself. Subtract your average offset balance from your mortgage balance, multiply by your annual interest rate, then divide by 365 to estimate daily interest. For a $600,000 loan with $50,000 in offset at 6.26%, the daily figure is approximately $94. Compare that against what is actually being charged in your statement. If the numbers are materially different, raise it with your lender immediately.

It is also worth checking whether you are paying a premium for the feature. Some lenders attach higher rates, package fees, or annual fees to loans that include offset functionality. If your offset balance is relatively small, the additional loan cost may outweigh the interest saving. Independent data shows that 45% of lenders now offer offset accounts with their lowest advertised variable rates, and several provide the feature with no additional monthly or annual fees. Compare home loans with offset accounts to see whether your current package still makes sense.

If you are unsure whether your offset is genuinely competitive, reviewing your overall structure against current refinance options is a practical next step — particularly if your loan is more than two years old.

If your calculations suggest you have been overcharged, raise the matter formally with your lender. The lender has 30 days to respond to a formal complaint. If you are not satisfied with the outcome, the Australian Financial Complaints Authority (AFCA) provides independent dispute resolution at no cost to borrowers.

The Practical Takeaway

An offset account remains one of the most effective tools available for reducing mortgage interest, shortening your loan term, and keeping savings accessible. But "set and forget" does not apply here. The ASIC findings confirm that even a well-intentioned product can fail silently — and you are the one who pays for it.

If you have not checked your offset linkage in the past year, or if you are unsure whether the interest calculations in your statements reflect your offset balance, today is a good day to find out. Use our repayment calculator to model what your loan could look like with and without an active offset, and understand what is genuinely at stake over the life of your loan.

If anything looks wrong, or if your loan structure has become more complex over time, a mortgage broker can review the setup and make sure your offset is doing the job it was designed to do.

Property Update