Introduction
For many Australians, an offset account is a key feature of their home loan — a linked transaction account designed to reduce the interest charged on your mortgage. But are borrowers really getting the full benefit?
In 2025, the Australian Securities and Investments Commission (ASIC) launched a probe into how banks manage offset accounts, after reports that some lenders may not be passing on promised savings. This has left many borrowers in Sydney, Melbourne, Brisbane, Perth, Adelaide, Hobart, Canberra, and Darwin wondering whether they are being short-changed.
What is an Offset Account?
An offset account works by linking your mortgage to a savings or transaction account. Any money sitting in the offset reduces the loan balance used to calculate daily interest.
Example:
- Loan balance: $500,000
- Offset balance: $50,000
- Interest charged only on $450,000
In theory, this can save borrowers tens of thousands over the life of the loan.
Why ASIC is Investigating
ASIC’s probe has been triggered by concerns that:
- Some banks are not properly applying offset balances.
- Borrowers are not receiving promised interest reductions.
- Terms and conditions are unclear, leaving customers confused.
This is especially troubling at a time when lenders are competing aggressively on interest rates, with BOQ offering a two-year fixed at 4.89% and NAB and ANZ at 5.19%.
Why Offset Accounts Matter in Today’s Market
With 18 lenders now offering sub-5% fixed rates, offset accounts are often the “tie-breaker” feature that influences borrower choice. But if these accounts don’t function properly, borrowers could miss out on:
- Thousands in savings
- Faster loan repayment timelines
- Greater flexibility in managing cash flow
Risks Borrowers Face
- Hidden Fees – Some lenders attach high account-keeping charges that erode savings.
- Partial Offsets – Not all offsets are 100%. Some only reduce interest on a portion of the balance.
- System Failures – ASIC’s concerns highlight potential operational lapses.
- Lack of Transparency – Borrowers may not realise their offset isn’t working as expected until years later.
Capital City Insights
- Sydney: Large loan balances make functional offsets critical to saving.
- Melbourne: Strong lender competition provides choice — if borrowers know what to look for.
- Brisbane: First home buyers can accelerate equity growth with well-used offsets.
- Perth: Growing property values make offsets useful for debt reduction.
- Adelaide: Smaller loans still benefit significantly from fee-free offset accounts.
- Hobart: Offset accounts can help long-term owners pay down debt faster.
- Canberra: Stable public sector incomes = consistent offset deposits.
- Darwin: Regional lenders offer niche offset structures — but features vary widely.
Real Client Story: Hannah in Melbourne
“I had an offset account but couldn’t see the benefit. My broker reviewed my loan, uncovered hidden fees, and refinanced me to a lender with a true 100% offset. I’m now saving $200 a month and paying off my loan years faster.”
How a Mortgage Broker Can Help
- Compare 50+ lenders – Brokers know which lenders offer genuine offset benefits.
- Cut through fine print – Explaining partial offsets, redraw differences, and fee structures.
- Negotiate better features – Some lenders offer package discounts through broker channels.
- Monitor compliance – Ensuring lenders deliver on offset promises.
The Bigger Picture
ASIC’s scrutiny is good news for borrowers:
- It pressures banks to fix systemic issues.
- It increases transparency in how offsets function.
- It reminds borrowers to actively review their loans.
But regulation alone won’t guarantee savings. Borrowers need advocates who can check the details and push lenders for accountability.
Why Now is the Time to Act
With sub-5% fixed rates available, RBA cuts looming, and ASIC shining a spotlight on bank practices, now is the perfect time to:
- Reassess your mortgage
- Check whether your offset account is functioning properly
- Consider refinancing to a lender with stronger features and accountability
📅 Book Your Free, No-Obligation Chat
At Money Tree Mortgage Brokers, we help you go beyond the headline rate. We’ll show you how offset accounts really work, which lenders deliver the best value, and whether refinancing could save you thousands.
