Commonwealth Bank’s Executive General Manager Home Buying, Dr Michael Baumann, said while some of the growth in offset accounts could be attributed to certain seasonality factors, it was also clear customers are looking for ways to better manage their finances in the current environment.
“An offset account is a transaction account linked to an eligible home loan or investment home loan that can help borrowers to pay less interest over the life of their loan and reduce the time it takes for them to pay their home loan off,” he said.
Borrowers with a $500,000, 30-year home loan with an interest rate of 4.50 per cent p.a. who have a starting offset balance of $10,000 and add a further $100 deposit to their offset every month, could save in excess of $60,000 over the life of their loan.
“At Commonwealth Bank, we offer eligible home loan customers the option to take advantage of multiple free offset accounts, which is perfect for those people who like to give their money a specific task and then set it aside into different accounts to ensure it is only used for its designed purpose. Eligible customers can also take advantage of our redraw facility, which can help them to pay less interest on their loan,” Dr Baumann said.
One such customer who has been taking advantage of the multiple offset accounts offered by the bank is Marisa Cregan. The mother of two utilises 10 offset accounts that are connected to her Commonwealth Bank home loan.
According to Ms Cregan, the 10 offset accounts – all of which work together to offset the interest charged on her home loan – helps her to bucket her money and ensure she keeps track of her finances.
“We have an offset account for our savings, as well as one for our everyday expenses and another for our regular monthly expenses – like our mortgage repayments, phone bills, childcare costs. All of the money my husband and I earn has a purpose and having multiple offset accounts helps to ensure our money goes towards what we intended it for,” Ms Cregan said.
The recent growth in offset accounts recorded by CBA follows research from earlier this year when it was revealed more than 90 per cent of home owners were actively preparing for imminent rate increases on their mortgage.
Back before the first rate increase in May this year, 92 per cent of home owners said they were “doing something to prepare for the impact of a rate rise on their mortgage”. Of those, 37 per cent of home owners said they were putting more money into their offset or redraw facility that is connected to their home loan.
Dr Baumann said it’s encouraging to see that …….