SYDNEY (Reuters) – Australia’s centre-left Labor government has asked financial regulators to help would-be home buyers with student loans to enter the property ladder as it faces a tough election where sky-high housing costs have seen its popularity plunge.
At the request of Treasurer Jim Chalmers, financial regulators said they would make it easier for Australians with student debt to buy homes, Treasury said in a statement.
The office cited a response from Australian Prudential Regulation Authority (APRA) that it would tell banks that they can exclude student loan repayments from serviceability assessments where they expect a borrower to pay off their debt in the near term.
APRA will start a consultation soon on the plan.
“We’re tackling this housing challenge from every possible angle,” Chalmers said.
“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 maintained a mortgage serviceability buffer of 300 basis points for banks since 2021. With interest rates at 12-year high of 4.35%, the requirement has greatly reduced borrowing demand.
Chalmers also asked APRA to clarify a 2017 rule that said finance for construction of new unit blocks should depend on all properties being pre-sold, which has been cited as a barrier for financing.
APRA was quoted as saying it will communicate to banks that the regulator does not expect 100% pre-sales.
(Reporting by Stella Qiu; Editing by Kim Coghill)
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