Use of mortgage offset accounts up 10%
The use of mortgage offset accounts continues to increase as Australians make their home loans work harder for them, says CBA.
Over the past 12 months, CBA has witnessed a growth of around 10 per cent in both the proportion of eligible customers with offset accounts and the balances in these accounts.
CBA’s executive general manager of home buying, Michael Baumann, says some of the growth in offset accounts can be attributed to certain seasonality factors, but it is also clear customers are looking for ways to better manage their finances in the current environment.
Borrowers with a $500,000, 30-year home loan with an interest rate of 4.5 per cent a year 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.
The recent growth in offset accounts follows research earlier this year which revealed more than 90 per cent of homeowners were actively preparing for imminent rate increases on their mortgages.
Back before the first rate increase in May this year, 92 per cent of homeowners said they were “doing something to prepare for the impact of a rate rise on their mortgage”. Of those, 37 per cent of homeowners said they were putting more money into their offset or redraw facility that is connected to their home loan.
Baumann says it’s encouraging to see that Australian homeowners are taking proactive steps to strengthen their financial position given that rates are still expected to increase further over the coming months.