MFAA responds to Federal Government changes to treatment of HECS-HELP debt
Published by MFAA
The Australian Government has confirmed it will adopt a key recommendation from the Mortgage & Finance Association of Australia (MFAA) to revise how HECS-HELP debts are treated when assessing home loan applications. The Treasurer, the Hon. Jim Chalmers, has announced that APRA and ASIC will update their guidance on HECS-HELP, a move that stands to benefit first homebuyers in particular.
What It Means for Homebuyers?
According to MFAA CEO Anja Pannek, this change stems from feedback directly from mortgage brokers, who found the existing rules a significant barrier for young Australians looking to enter the property market. While brokers handle 75% of all Australian mortgages and nearly 80% of first home loans, many aspiring buyers were held back by the way student debt affected loan serviceability.
By adjusting HECS-HELP assessment guidelines, lenders will have more clarity on how to account for these debts, ensuring that graduates aren’t unduly penalized. This is expected to open doors for more potential homeowners and provide greater flexibility in an evolving lending landscape.
MFAA CEO Anja Pannek said it was great to see the government moving to adopt the sensible recommendation made by the peak industry body to the Senate Inquiry into the Financial and Regulatory Framework and Home Ownership in September 2024.
“This announcement is one of the key recommendations we made to the inquiry. Our members were very vocal when we consulted with them that this was one of the key barriers for prospective homeowners,” Ms Pannek said.
“We surveyed our members, and the message from them was clear – the rules governing HECS-HELP debt when it comes to home loans were prohibitive to first-home buyers entering the market and needed to change.
“In reflecting our members’ views, our submission called on the Government to adjust the way in which student loan debt was treated for first-home buyers.
Ms Pannek said updates to the guidance regulators apply to HECS-HELP will remove arbitrary barriers to serviceability for aspiring homebuyers, providing more certainty to lenders in the treatment of student loans and, therefore, increasing the opportunity for mortgage brokers to help more clients into homes.
The MFAA CEO went on to note there were further opportunities to improve homeownership opportunities for Australian first-home buyers.
“We will continue, amongst other things, to advocate for greater flexibility in the serviceability buffer and to encourage simplification of government home ownership schemes across both state and federal levels,” Ms Pannek said.
You can read the MFAA’s recommendation regarding HECS-HELP debt in our submission here: Submission reinforces importance of mortgage brokers for homebuyers