Source: BNZ Statements
New Zealand homeowners could be leaving thousands of dollars on the table each year, with a new BNZ survey suggesting a significant knowledge gap about offset mortgages – a product that helped BNZ customers save over $200 million in home loan interest last year alone.
While most respondents have heard of offset mortgages, nearly half (46%) admitted they either don’t know much about them or have never heard of them at all. In addition, 29% of those who know about them also believe you need to keep large balances in your account all year for offset mortgages to be effective.
“There’s a real disconnect between awareness and understanding when it comes to this type of home loan,” says BNZ General Manager Home Lending James Leydon.
“This suggests many could be missing out on a straightforward way to reduce their interest, too often because they think it’s only for wealthy people or that it’s too complex to manage.”
Offset mortgages allow homeowners to link their everyday transaction and savings accounts to their home loan, so the money in those accounts reduces the balance on which interest is calculated. Borrowers can split their home loan between offset and fixed rate portions, combining the benefits of interest savings with rate certainty.
The $200 million question
The scale of potential savings is significant.
BNZ’s own data shows that in 2024 alone, customers using its TotalMoney offset home loan saved $200 million in interest payments.
More than 13,000 customers paid zero interest on their TotalMoney loans for periods throughout the year, while the average effective interest rate across all TotalMoney loans was just 1.71% p.a.
“These aren’t just wealthy people – these are everyday New Zealanders who’ve learned how to make their money work smarter,” says Leydon.
“People from all walks of life are using their regular savings and their transaction account balances to offset their home loan interest.”
Busting the myths
Among those who responded to the survey, misconceptions emerged that may be preventing homeowners from exploring offset options:
- 58% of those aware of offset mortgages correctly understand they are a simple way to save interest
- But around one in two of those incorrectly believe you need large account balances all year round
- Just 23% see them as being “for everyday people”
“The beauty of offset home loans is they work with whatever money you have,” explains Leydon.
“Whether it’s your pay sitting in your account for a few weeks, holiday savings building up over months, or your emergency fund, every dollar reduces the interest you pay, even if it’s only there temporarily.”
Unlike traditional savings accounts that generally earn minimal interest, money in offset accounts can effectively “earn” the equivalent of your home loan rate – currently around 5-6% for most borrowers.
Despite the benefits, only 27% of respondents indicated they have an offset loan and are using the money in their savings and their transaction accounts to offset their mortgage interest.
“We know many homeowners are looking for ways to reduce their costs in the current economic environment, and I would really encourage them to explore offset options. Especially when you consider that in many cases, it’s simply about restructuring existing money rather than finding additional funds.”
Making home loan dollars work harder
BNZ allows customers to connect up to 50 TotalMoney transaction and savings accounts – including family members’ accounts – with balances automatically offsetting home loan interest daily.
The bank has been refining the product since its launch, responding to customer feedback about making home loan management simpler and more effective.
“We want more people to understand that offset mortgages aren’t just for property investors or high-net-worth individuals,” says Leydon.
“They’re a practical tool for anyone who keeps money in bank accounts and wants to reduce their home loan interest.”
Source: BNZ Voice customer panel survey, 23rd July to 3rd August 2025. Responses applied to this analysis from n=277 respondents with any home loan. The profile of participating customers was not controlled for this survey.
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