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Treasurer Jim Chalmers has announced that financial regulators – the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) – will be updating their lending rules in relation to Australians with HELP debt to “responsibly take out a mortgage and buy a home and also unlock the construction of more units”.
According to Chalmers, young Australians are currently facing a hurdle in entering the housing market in the form of reluctance from lenders to give them a mortgage.
He noted that the Australian Banking Association flagged that this uncertainty stems from the interpretation of lending guidance and regulations from ASIC and APRA.
“We’re tackling this housing challenge from every possible angle,” the Treasurer said.
“These are commonsense changes that will help more Australians into a home … I’ve agreed [to] these changes in discussions with regulators and convened the banks to discuss them.
“People with a HELP debt should be treated fairly when they want to buy a house and we’re working with the regulators to make sure they are.
“By unlocking more finance from the banks, we’ll see more housing projects get off the ground more quickly.”
Chalmers stated that ASIC has reportedly confirmed it will “move quickly to implement changes to its guidance on the treatment of HELP debts” pending targeted consultation.
Meanwhile, APRA has also confirmed it will commence consultation on the treatment of HELP debts in regard to serviceability requirements and debt reporting.
“The government has also asked APRA to update and clarify its regulatory guidance to help unlock the construction of more units,” Chalmers said.
At present, responsible lending regulations require lenders to treat a loan applicant’s HECS-HELP student debt in the same manner as other debts, such as credit card balances or personal loans.
This is the case even though the student debt does not need to be repaid if the borrower is unemployed or earning less than $54,435 in 2024–25 or $67,000 in 2025–26.
This move was welcomed by Westpac CEO Anthony Miller who said targeted intervention will help to improve the country’s housing supply.
“Long-term and chronic structural obstacles have made the cost and risk of building new homes unattractive for many builders and developers,” Miller said.
“The clarification on pre-sale requirements will offer greater certainty to move quickly on developments and construction, while changing the treatment of HELP loans in serviceability assessments will assist aspiring home buyers.”
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