Australia’s Labor Government Aims to Assist Home Buyers with Student Loans

SYDNEY (Reuters) – Australia’s centre-left Labor government has requested financial regulators to assist potential home buyers with student loans, amid declining popularity due to high housing costs in the run-up to elections.

The Treasury announced that, per Treasurer Jim Chalmers’ request, financial regulators plan to ease the pathway for Australians with student debt seeking to buy homes.

The announcement included a response from the Australian Prudential Regulation Authority (APRA), stating that it would inform banks they can exclude student loan repayments from serviceability assessments if they expect a borrower to pay off their debt soon.

APRA will initiate a consultation on this plan shortly.

> “We’re tackling this housing challenge from every possible angle,” said Chalmers. “People with a HELP debt (student loan) should be treated fairly when they want to buy a house and we’re working with the regulators to make sure they are.”

APRA has kept a mortgage serviceability buffer of 300 basis points for banks since 2021, and with interest rates reaching a 12-year high of 4.35%, this requirement has significantly curtailed borrowing demand.

Additionally, Chalmers urged APRA to clarify a 2017 rule stating that financing for the construction of new unit blocks should depend on all properties being pre-sold, which has been a noted barrier for financing.

APRA indicated it would inform banks that it does not require 100% pre-sales for financing approval.