diff --git a/spring-cloud-stream-binder-kafka/src/test/java/org/springframework/cloud/stream/binder/kafka/KafkaBinderAutoConfigurationPropertiesTest.java b/spring-cloud-stream-binder-kafka/src/test/java/org/springframework/cloud/stream/binder/kafka/KafkaBinderAutoConfigurationPropertiesTest.java
index 6b03a3072..fcb9c6eb3 100644
--- a/spring-cloud-stream-binder-kafka/src/test/java/org/springframework/cloud/stream/binder/kafka/KafkaBinderAutoConfigurationPropertiesTest.java
+++ b/spring-cloud-stream-binder-kafka/src/test/java/org/springframework/cloud/stream/binder/kafka/KafkaBinderAutoConfigurationPropertiesTest.java
@@ -87,7 +87,7 @@ public class KafkaBinderAutoConfigurationPropertiesTest {
 		assertTrue(consumerConfigs.get("key.deserializer").equals(LongDeserializer.class));
 		assertTrue(consumerConfigs.get("value.deserializer").equals(LongDeserializer.class));
 		assertTrue(consumerConfigs.get("group.id").equals("test"));
-		assertTrue(consumerConfigs.get("auto.offset.reset").equals("latest"));
+		assertTrue(consumerConfigs.get("auto.offset.reset").equals("earliest"));
 		assertTrue((((List<String>) consumerConfigs.get("bootstrap.servers")).containsAll(bootstrapServers)));
 	}
 
diff --git a/spring-cloud-stream-binder-kafka/src/test/java/org/springframework/cloud/stream/binder/kafka/KafkaBinderUnitTests.java b/spring-cloud-stream-binder-kafka/src/test/java/org/springframework/cloud/stream/binder/kafka/KafkaBinderUnitTests.java
new file mode 100644
index 000000000..3e4bce62e
--- /dev/null
+++ b/spring-cloud-stream-binder-kafka/src/test/java/org/springframework/cloud/stream/binder/kafka/KafkaBinderUnitTests.java
@@ -0,0 +1,82 @@
+/*
+ * Copyright 2017 the original author or authors.
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *      http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+package org.springframework.cloud.stream.binder.kafka;
+
+import java.lang.reflect.Method;
+import java.util.Collections;
+import java.util.Map;
+
+import org.apache.kafka.clients.consumer.ConsumerConfig;
+import org.junit.Test;
+
+import org.springframework.cloud.stream.binder.ExtendedConsumerProperties;
+import org.springframework.cloud.stream.binder.kafka.admin.AdminUtilsOperation;
+import org.springframework.cloud.stream.binder.kafka.properties.KafkaBinderConfigurationProperties;
+import org.springframework.cloud.stream.binder.kafka.properties.KafkaConsumerProperties;
+import org.springframework.cloud.stream.binder.kafka.provisioning.KafkaTopicProvisioner;
+import org.springframework.integration.test.util.TestUtils;
+
+import static org.assertj.core.api.Assertions.assertThat;
+import static org.mockito.Mockito.mock;
+
+/**
+ * @author Gary Russell
+ * @since 1.2.2
+ *
+ */
+public class KafkaBinderUnitTests {
+
+	@Test
+	public void testPropertyOverrides() throws Exception {
+		KafkaBinderConfigurationProperties binderConfigurationProperties = new KafkaBinderConfigurationProperties();
+		AdminUtilsOperation adminUtilsOperation = mock(AdminUtilsOperation.class);
+		KafkaTopicProvisioner provisioningProvider = new KafkaTopicProvisioner(binderConfigurationProperties,
+				adminUtilsOperation);
+		KafkaMessageChannelBinder binder = new KafkaMessageChannelBinder(binderConfigurationProperties,
+				provisioningProvider);
+		KafkaConsumerProperties consumerProps = new KafkaConsumerProperties();
+		ExtendedConsumerProperties<KafkaConsumerProperties> ecp =
+				new ExtendedConsumerProperties<KafkaConsumerProperties>(consumerProps);
+		Method method = KafkaMessageChannelBinder.class.getDeclaredMethod("createKafkaConsumerFactory", boolean.class,
+				String.class, ExtendedConsumerProperties.class);
+		method.setAccessible(true);
+
+		// test default for anon
+		Object factory = method.invoke(binder, true, "foo", ecp);
+		Map<?, ?> configs = TestUtils.getPropertyValue(factory, "configs", Map.class);
+		assertThat(configs.get(ConsumerConfig.AUTO_OFFSET_RESET_CONFIG)).isEqualTo("latest");
+
+		// test default for named
+		factory = method.invoke(binder, false, "foo", ecp);
+		configs = TestUtils.getPropertyValue(factory, "configs", Map.class);
+		assertThat(configs.get(ConsumerConfig.AUTO_OFFSET_RESET_CONFIG)).isEqualTo("earliest");
+
+		// binder level setting
+		binderConfigurationProperties.setConfiguration(
+				Collections.<String, Object>singletonMap(ConsumerConfig.AUTO_OFFSET_RESET_CONFIG, "latest"));
+		factory = method.invoke(binder, false, "foo", ecp);
+		configs = TestUtils.getPropertyValue(factory, "configs", Map.class);
+		assertThat(configs.get(ConsumerConfig.AUTO_OFFSET_RESET_CONFIG)).isEqualTo("latest");
+
+		// consumer level setting
+		consumerProps.setConfiguration(Collections.singletonMap(ConsumerConfig.AUTO_OFFSET_RESET_CONFIG, "earliest"));
+		factory = method.invoke(binder, false, "foo", ecp);
+		configs = TestUtils.getPropertyValue(factory, "configs", Map.class);
+		assertThat(configs.get(ConsumerConfig.AUTO_OFFSET_RESET_CONFIG)).isEqualTo("earliest");
+	}
+
+}