APRA proposes updated approach to HELP debts

The Australian Prudential Regulation Authority (APRA) has announced a consultation on proposed changes to how banks treat Higher Education Loan Program (HELP) debt repayments when assessing home loan applications. 

APRA aims to provide clarity to banks and borrowers by suggesting two key adjustments: removing HELP debts from debt-to-income reporting and allowing banks to exempt HELP debts from serviceability assessments if the borrower is expected to repay the debt in the near term. 

APRA Member Therese McCarthy Hockey said, ‘The changes we are proposing today should support a more consistent approach across the sector by confirming the flexibility available to banks to consider the individual circumstances of borrowers with HELP debts. They may also help make it a little easier for some borrowers with HELP debts to purchase homes at an earlier time.’ 

The consultation is open for feedback, and APRA expects to incorporate the final changes into its prudential framework in the second half of the year.