Key Australian financial ministers announced pivotal updates in financial regulation aimed at facilitating easier access to home mortgages, particularly for individuals with HELP debt, and boosting the construction of additional housing units.
Spearheaded by Treasurer Jim Chalmers (pictured above), these reforms are part of the Albanese government’s broader initiative to tackle housing affordability from multiple angles.
“These are commonsense changes that will help more Australians into a home,” Chalmers said.
The government is adjusting mortgage serviceability assessments to account for debts from the Higher Education Loan Program (HELP), which supports students with expenses like tuition and overseas study, simplifying home loan access for graduates.
This change comes after consultations with regulators and discussions with banks, reflecting a significant shift towards fairer lending practices.
“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,” Chalmers said.
The Australian Prudential Regulation Authority (APRA) and the Australian Securities & Investments Commission (ASIC) are set to amend their guidelines, which have previously restricted financing for new construction projects.
APRA has clarified that while pre-sales are important for credit risk management, it does not necessitate 100% pre-sales, addressing a major barrier cited by lenders that has hampered the construction of new unit blocks.
Builders and developers have welcomed these changes, noting that previous stringent lending rules have stifled building activity and exacerbated financial challenges within the industry.
Denita Wawn, CEO of Master Builders Australia, praised the review.
“This is a sensible first step in encouraging more investment into the industry and tackling housing supply and affordability challenges,” Wawn said.
These regulatory adjustments are part of the government’s comprehensive $32 billion Homes for Australia plan, aiming to build 1.2 million homes by the end of the decade to make housing more affordable.
By reducing financial barriers to homeownership and construction, this initiative aims to directly address the critical shortage of housing.
The announcement also included a pointed critique of opposition leader Peter Dutton’s policies, which Chalmers suggested would exacerbate the housing shortage.
“Peter Dutton’s cuts to housing would mean fewer homes when Australia desperately needs more,” he said.
