Government Announces Major Changes to Home Loan Rules: What It Means for You
In a move that could make home ownership more accessible for Australians with student debt, the Federal Government has announced significant changes to the way HECS-HELP loans are treated in home loan applications. These changes aim to improve serviceability assessments, making it easier for first-home buyers and investors to access finance.
Let’s break down what this means for borrowers, home buyers, and property investors.
HECS-HELP and Home Loan Applications: What’s Changing?
Under current responsible lending rules, lenders assess HECS-HELP debt just like they would a credit card or personal loan, even though HECS repayments are income-dependent and paused if the borrower earns under $54,435 (2024-25) or $67,000 (2025-26).
Many mortgage brokers and industry experts have argued that this approach drastically reduces borrowing capacity, sometimes by tens or even hundreds of thousands of dollars.
In response, Treasurer Jim Chalmers has instructed ASIC (Australian Securities and Investments Commission) and APRA (Australian Prudential Regulation Authority) to update their guidance on how student loans are considered in home loan applications.
“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,” said Treasurer Jim Chalmers.
Both ASIC and APRA will begin consultations on adjusting serviceability requirements and debt reporting to better reflect the reality of HECS-HELP repayments.
This could mean:
✅ Higher borrowing power for first-home buyers with student loans
✅ More flexibility in serviceability assessments
✅ A better chance of loan approval for buyers who would previously be restricted
Changes to Financing for New Unit Developments
The Federal Treasurer has also directed APRA to clarify its guidance on financing new unit developments, which could help increase housing supply.
Previously, APRA guidance from 2017 led some lenders to believe that 100% of units in a new development needed to be pre-sold before financing could be approved. This made it difficult for smaller developers to start construction without full financial backing.
What’s changing?
- APRA has now clarified that 100% pre-sales are NOT required for financing.
- Banks are encouraged to consider pre-sales as part of credit risk management, but they are not mandatory.
- This change could unlock more housing projects and boost the supply of new apartments.
“We’re tackling this housing challenge from every possible angle,” Chalmers said. “These commonsense changes will help more Australians into a home.”
Industry Reactions: What This Means for You
The Australian Banking Association (ABA) has welcomed the decision, with CEO Anna Bligh stating that the changes will help unlock more credit for home buyers while ensuring responsible lending remains in place.
Banks will still need to ensure borrowers can afford their loans, but the updates provide greater clarity around lending rules and may reduce unnecessary barriers to home ownership.
“The challenges of reducing barriers to home ownership won’t be solved by one single factor, but these clarifications should assist in unlocking more credit,” Bligh said.
What This Means for You as a Borrower
These changes could make it easier to secure a home loan if you have HECS-HELP debt or are looking to buy in a new apartment development.
If you’re wondering how much you can borrow under these updated lending rules, we can help.
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Disclaimer: The content of this article is general in nature and does not constitute financial or tax advice. Please consult a professional before making any decisions.
