One of Australia’s major banks has made changes to its offset accounts policy aimed at making it easier for customers to organise their home loan.
Westpac Expands Offset Account Options
The demand for offset accounts at Westpac has risen significantly in the last five years, prompting the major bank to introduce a new policy allowing borrowers to set up multiple offset accounts without incurring additional fees.
Westpac managing director of mortgages, Damien MacRae, told Broker Daily that the policy was introduced to give borrowers greater choice and control.
“With interest rates top of mind for Australians, we know many customers are thinking about how to get ahead on their home loan,” he said.
“An offset account is an everyday bank account linked to your home loan, where every dollar in your account reduces, or offsets, the interest you pay.
“We’ve seen a steady increase in customers building up their offset balances. We will be rolling out the option for customers to set up to 10 offset accounts to offer greater flexibility in how they manage their savings while reducing the interest charged on their home loan.”
How Multiple Offset Accounts Benefit Borrowers
Mr. MacRae explained that having multiple offset accounts makes it easier for borrowers to manage their finances.
“Multiple offset accounts give you the flexibility to ‘bucket’ finances for different purposes,” he told Broker Daily.
“An example of this could be setting aside money in separate offset accounts for everyday living expenses, a holiday, or emergency funds. This can offer benefits such as more visibility and control over how you allocate your money, manage your cash flow, and track spending.
“Multi-offset accounts can also allow customers the flexibility to open a home loan with family or friends and still reduce their interest payments while keeping their broader finances separate.”
More Borrowers Using Offset Accounts to Reduce Interest
Home loan borrowers at Westpac and other major banks are increasingly using offset accounts to pay down their loans faster, with nearly half of Westpac borrowers currently utilizing the product.
According to Westpac’s latest media release, an offset account balance of $10,000 with an additional $100 deposit each month could save a borrower over $110,000 in interest and nearly three years off a 30-year home loan of $500,000.
