Mortgage Offset Errors: Are You Owed Thousands? 2026

Mortgage offset errors have led to Australian banks paying out millions in compensation, and you could be among those owed thousands. The Australian Securities and Investments Commission (ASIC) found that lenders repaid $55 million to customers over two years due to offset account failures, with the number expected to climb. If you have a home loan with an offset account, it's crucial to verify that your account is working correctly to avoid overpaying interest.

What Is a Mortgage Offset Account?

A mortgage offset account is a savings account linked to your home loan. The balance in this account is offset against your outstanding mortgage principal, reducing the amount of interest you pay. For example, if you owe $400,000 on your mortgage and have $50,000 in an offset account, you only pay interest on $350,000. This can save you thousands in interest and help you pay off your loan faster.

Offset accounts are extremely popular in Australia—more than half of the nearly 3.3 million households with a mortgage have one, according to Reserve Bank data. They offer a flexible way to manage your finances while reducing interest costs.

How Common Are Offset Account Errors?

ASIC's review of over 200,000 home loans from eight major banks revealed widespread weaknesses in how offset accounts are set up, monitored, and managed. These errors meant that some customers did not receive the full interest savings they were entitled to. In one extreme case, a borrower was overcharged more than $3,500 in interest in a single month.

The total compensation paid so far is $55 million, but ASIC warns that this figure will rise as more errors are identified. This is a significant issue that could affect thousands of Australians without their knowledge.

How to Check If You're Affected

Here are steps you can take to determine if your offset account has been working correctly:

• Review your mortgage statements – Check your monthly statements to see if the interest charged matches what you expect based on your offset balance.
• Log into your online banking – Most lenders provide a detailed account summary online. Look for the offset account balance and ensure it is linked to your home loan.
• Contact your lender – If you notice any discrepancies, call your bank and ask them to investigate. You may be entitled to a refund.
• Seek professional advice – A mortgage broker or financial advisor can help you understand your rights and assist with claims.

Comparison: Correct vs. Faulty Offset Account

As the table shows, a faulty offset account can cost you an extra $250 per month—or $3,000 per year—in unnecessary interest. Over the life of a loan, this could amount to tens of thousands of dollars.

What to Do If You Find an Error

If you discover that your offset account has not been applied correctly, you should immediately contact your lender. Under the National Credit Code, you are entitled to have the error corrected and receive compensation for the overcharged interest. Banks are required to compensate customers for any losses caused by their mistakes.

In many cases, the bank will conduct an internal review and issue a refund. If you are not satisfied with the response, you can escalate the matter to the Australian Financial Complaints Authority (AFCA), which provides free and independent dispute resolution.

Key Takeaways

• Mortgage offset errors are more common than you think, affecting thousands of Australians.
• Banks have already paid $55 million in compensation, with more expected.
• Check your mortgage statements and online banking regularly.
• If you find an error, contact your lender immediately to claim a refund.
• Seek professional advice if you need help navigating the process.

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