CANBERRA, Feb. 12 (Xinhua) -- The Australian government has instructed the nation's banks to disregard student loan debts when assessing home loan applications.
Treasurer Jim Chalmers on Wednesday announced an overhaul of banking regulations aimed at increasing the home ownership rate among young Australians.
New guidance from financial regulators the Australian Prudential Regulation Authority (APRA) and Australian Securities and Investments Commission (ASIC) directs banks to ignore Higher Education Loan Program (HELP) repayments when assessing an applicant's ability to service a mortgage.
The HELP provides loans to Australian students to pay higher education fees. Compulsory repayment of the loans start when a recipient earns more than a set threshold.
Under the updated regulations, banks will be able to exclude HELP repayments in serviceability assessments for a mortgage when an applicant is expected to pay off the debt in the near term.
"These are commonsense changes that will help more Australians into a home," Chalmers said.
"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."
According to the Australian Institute of Health and Welfare, the home ownership rate among Australians aged 25-29 fell from 54 percent in 1976 to 36 percent in 2021.
Chalmers also said that APRA will update lending rules for housing developers to clarify that a planned block of units does not need to be entirely sold off the plan to qualify for a loan.
He said that the change would unlock more finance from banks to get housing projects off the ground more quickly.
The federal government has set a goal of building 1.2 million new homes over the five-year period to 2029. ■
