Using Offset account as a Savings Account

I was having a think about this the other day and I cannot see any problems myself, so I was hoping maybe with a new set of eyes to see it they could see some flaw in my plan. I have thought of a couple flaws, as I will explain, but no financial ones anyway.

So basically my situation is I have a home loan (PPOR) of about $250k with an offset account.

My idea is basically, would I be able to use this home loan as a savings account for a friend. Now, the interest rate on my home loan is 6.88%, the highest savings account interest rate I have seen is around 6.50% and they have all sorts of limitations, such as minimum deposits per month, limit of transactions, account keeping fee, not always all of these, but generally a couple of them.

So say my friend had $100k in his savings account, would he theoretically be able to put the money into my offset account and give him full flexibility to do whatever he wants with the money, take out whenever he wants, put in however much he wants etc. Obviously the transactions coming out would have to go through me, but the ones going in he could obviously do himself.

I could offer him a 6.50% interest rate (tax free) and make a savings of the 0.38% extra interest rate on my home loan, it might not sound like much but I guess the couple thousands of dollars is better in my hands than in the banks.

Just doing the numbers on a simple spreadsheet I came up with (using the above figures – assuming an after tax of 4.50% for the bank savings interest rate). I came up with a saving of $2700 after just one year.

I guess the main thing is to have a friend that would trust you enough to let you 'borrow' his money and put it into your home loan, but apart from that I do not know if there is anything I am really missing?

Does anyone have any ideas? Thanks

James