Hidden offset account errors may be costing borrowers thousands

Mortgage offset accounts are designed to help borrowers save interest and pay off their home loan sooner. However, a review by the financial services regulator, ASIC, has found some Australians have been missing out on those savings because their offset accounts were not working properly.

ASIC reported that banks paid more than $55 million in compensation to customers for offset account failures identified between 1 September 2023 and 31 August 2025. The regulator expects that figure to increase as banks continue investigating the extent of the problem.

ASIC Chair Sarah Court said offset accounts are promoted as a simple way to reduce the interest paid over the life of a loan, but some banks failed to deliver on that promise.

“When offset accounts don’t operate correctly, the harm can be hidden,” Ms Court said. “Loan repayments stay the same, while customers unknowingly pay more interest and take longer to repay their loan.”

Why offset accounts matter

An offset account is an optional transaction account linked to your home loan. Instead of earning interest, the money in the account reduces the balance on which your lender calculates interest.

With Australians holding about $349.1 billion in offset accounts as of March 2026 – an increase of 28% over the previous two years – even a small error can have significant financial consequences over time.

ASIC reviewed the offset practices of eight banks covering more than 70% of Australia's home loan market. It found weaknesses in how all eight banks set up, monitored and managed offset accounts, resulting in some customers missing out on promised interest savings.

How to check your offset account

While ASIC expects banks to strengthen their processes, borrowers can also take a few simple steps to make sure their offset account is operating correctly:

• Confirm your offset account is linked to the correct home loan.
• Review your loan statements to check the offset feature is being applied.
• Compare your loan balance and offset balance to ensure the interest charged appears reasonable.
• Contact your lender and broker if something doesn't look right or you don't believe it's operating correctly.

An offset account should be saving you money, not costing you money. Reach out if you'd like us to review your home loan and make sure everything is working as it should.