The Government recently announced important updates to financial regulations, making it easier for Australians with a HELP debt to responsibly secure a mortgage and buy their first home.

Currently, many young Australians face significant hurdles entering the housing market due to banks’ hesitancy in approving mortgages for individuals with HELP debts.

The Australian Banking Association attributes this hesitancy partly to ambiguity in lending regulations provided by financial regulators APRA and ASIC.

Responding to these concerns, the Albanese Government confirmed collaboration with APRA and ASIC to clarify regulatory guidance, ensuring fair treatment of prospective homeowners with HELP debts.

APRA will soon begin consultations to specifically address how HELP debts should be assessed in mortgage serviceability calculations and debt reporting.

ASIC has committed to rapidly updating its lending guidance following targeted consultations to remove barriers affecting borrowers with HELP debts.

Additionally, the Government has requested APRA to revise its guidance related to financing the construction of new residential unit developments.

Historically, some lenders misinterpreted APRA’s 2017 guidance, believing that financing construction required 100% pre-sales, severely limiting housing supply, especially from smaller developers.

APRA will now clarify that while banks should prudently assess pre-sale levels, a 100% pre-sale requirement is not mandatory for funding new residential developments.

These common-sense adjustments are expected to significantly enhance housing availability by reducing unnecessary lending barriers and enabling more Australians to achieve homeownership.