The Albanese government has directed financial regulators to update lending guidance, making it easier for Australians with Higher Education Loan Program (HELP) debt to secure home loans.
The move is also expected to unlock more financing for unit construction.
The lending changes continue Labor’s pre-election push for younger voters, following its earlier move to cut nearly $20 billion (US$12.6 billion) from student loan debts.
Treasurer Jim Chalmers said the changes were about ensuring fair treatment for Australians looking to buy a home.
“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,” he said.
As per the plan, Australian Prudential Regulation Authority (APRA) will allow banks to exclude HELP repayments from serviceability assessments if a borrower is expected to repay their debt soon.
Additionally, APRA will revise debt-to-income reporting rules so that HELP debts are not classified as debt, acknowledging their income-contingent nature.
The Australian Securities and Investments Commission (ASIC) will amend its responsible lending guidance to ensure HELP debts are considered appropriately in lending assessments.
Banks Welcome Clarity, Industry Sees Credit Boost
The Australian Banking Association (ABA) has backed the move, calling it a constructive step toward increasing access to credit.“Our industry welcomes this move and the clarity it will provide for banks when they are making lending assessments,” said ABA CEO Anna Bligh.
“Banks support responsible lending rules to protect borrowers and ensure they can repay their loans. However, there is always merit in carefully considered updates to regulatory guidance that may help some Australians safely access more credit.”
Bligh added that while this change alone would not solve the barriers to homeownership, it could help some prospective buyers secure loans.
The government has also asked APRA to update guidance on financing new unit construction.
Some lenders have required 100 percent of units to be pre-sold before approving loans—a rule that has stifled housing supply.
APRA will now clarify that while pre-sales are a factor in risk management, they do not need to be absolute, potentially making it easier for developers to secure funding.
‘Ho-Hum’ Policy Ignores Housing Crisis: Opposition
The policy drew sharp criticism from Deputy Opposition Leader Sussan Ley, who accused Chalmers of taking three years to realise that young Australians struggle to buy a home.“It’s a real struggle to be a young person with a HECS debt and the cost of living crisis,” Ley told Sky News.
“Meanwhile, with a policy like this—ho-hum. But a million migrants have come into this country without a plan to house them.”
The Coalition has also strongly opposed the government’s move to waive student debts.
Opposition frontbencher Paul Fletcher and Nationals leader David Littleproud said the policy was unfair, arguing it benefits only three million Australians while costing all 27 million.
Shadow Treasurer Angus Taylor blamed rising student debt on what he called Labor’s “homegrown inflation.”
“The best way to address growing HECS debts is to fight Labor’s homegrown inflation at its source by reining in spending and strong budget management. Instead, Labor has let spending and inflation run out of control to the point that inflation is now stubborn, sticky, and homegrown,” Taylor said.
