NAB announced on Monday it will allow its home loan customers to set up to 10 offset accounts on their home loans.
It follows Westpac's move last week to offer eligible customers the option of multiple offset accounts on their home loans - a feature already available at Westpac subsidiaries, St George Bank, Bank of Melbourne, and BankSA.
Offset accounts allow home loan customers to deposit funds in an account or accounts linked to their home loans.
The money kept in those accounts is 'offset' against the loan amount, effectively reducing the balance that home loan interest is calculated on.
NAB said demand for offsets among its customers has ballooned in recent years with the bank's offset balances increasing by 65% since the pandemic to $48 billion.
According to the bank's data, around 70% of new home borrowers now offset their home loans, up from 50% in 2022.
Australians have collectively stashed upwards of $280 billion in offset accounts, according to the latest APRA data.
What is value of multiple offset accounts?
Multiple offset accounts on home loans have been offered by many smaller and challenger lenders for some years.
Essentially, they allow customers to deposit funds across several accounts, with the total of those balances being offset against their home loan balance.
It is particularly useful to people who employ the 'bucket' strategy of allocating funds to different accounts in achieving their financial goals.
NAB executive Andy Kerr said the new feature is perfect for the many Australians who bucket their money.
"With multiple offset accounts, they can continue doing this while also saving even more on their home loan interest," he said. "They no longer have to sacrifice one for the other."
He said traditional offset accounts have been homeowners' "secret weapon" during the high interest rate and cost-of-living environment.
"Multiple offset accounts take those savings to the next level," Mr Kerr said.
How much can an offset account save you?
A home loan with an offset account will generally come with higher interest rates or fees than a basic home loan, but the benefit comes when the offset balance effectively reduces the amount of interest payable over the term of the loan.
As funds accrue in offset accounts, borrowers can save considerable sums in interest and effectively cut their loan terms by years.
According to Westpac, on a $500,000 home loan taken out over 30 years, a customer with an offset balance of $10,000 adding an extra $100 every month could cut their interest by more than $110,000.
See also: Home Loan Offset Calculator
Big banks positioning for further mortgage wars?
Westpac was the first lender to announce it would be passing on the full 25 basis point cut in the cash rate to its home loan customers following the Reserve Bank decision on Tuesday last week.
The vast majority of home lenders have since followed suit, with all of the cuts taking effect by early March.
See also: RBA rate cut February 2025: Is your lender passing it on?
The move by Westpac and NAB to match smaller lenders in offering multiple offset accounts on home loans could be seen as a way of bolstering their product features ahead of any upcoming lending flurry triggered by falling interest rates.
Commentators widely agree one cut to the cash rate won't necessarily see the home lending market ignite, particularly with Reserve Bank governor Michele Bullock pouring water on market enthusiasm for two more rate cuts in 2025.
But by matching the flexible loan features of smaller, more dexterous lenders, it seems the two big banks are preparing themselves in any case.
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| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
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6.09% p.a. | 6.11% p.a. | $3,027 | Principal & Interest | Variable | $0 | $250 | 60% |
| Promoted | Disclosure |
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