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Westpac has introduced a new feature for borrowers that will allow them to set up multiple offset accounts with no additional fee.
This comes off the back of increased demand as according to the major, there has been a 37 per cent rise in offset accounts opened in the last five years. Meanwhile, there has been a 63 per cent increase in offset account balances.
Westpac’s managing director of mortgages, Damien MacRae, said the introduction of these changes was to support choice and control for borrowers.
“With interest rates top of mind for Australians, we know many customers are thinking about how to get ahead on their home loan. 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,” he said.
“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.
“Multiple offset accounts give you the flexibility to ‘bucket’ finances for different purposes. 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.”
Research from Westpac found that 44 per cent of customers utilised offset accounts to pay home loans quicker. Another 38 per cent liked the flexibility it provides and 25 per cent used it to improve their cash flow management.
Further research found that 71 per cent of Australians who have an offset account with their mortgage use it to reduce their home loan.
“For example, with an offset account balance of $10,000 and a further $100 deposit added every month, a customer can save more than $110,000 in interest on a 30-year home loan of $500,000. This would also reduce the loan term by nearly three years plus,” said Westpac.
This latest multiple offset account offering is available for brokers and their clients now. This service is already available to St.George, Bank of Melbourne, and BankSA customers.
