Government instructs APRA to relax HECS considerations in mortgage serviceability tests

The government has announced changes to lending guidelines for Australians with Higher Education Loan Program (HELP) debts, to more easily secure a mortgage.

APRA has confirmed it will begin consulting on changes to the treatment of HELP debts in serviceability requirements and debt reporting. ASIC will also move to adjust its responsible lending guidance. These updates aim to address concerns about how HELP debts impact mortgage applications, with the goal of giving young Australians a fairer chance to enter the property market.

In addition, the government has asked APRA to clarify its guidance on financing new unit developments. Since 2017, some lenders have interpreted APRA advice to mean that 100 per cent of units in a development must be pre-sold before construction can start. APRA will now communicate that while pre-sales are an important risk-management tool, full pre-sales are not a strict requirement.