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APRA Clarifies HELP Debt Considerations in Home Loan Assessments

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The Australian Prudential Regulation Authority (APRA) has released pivotal updates to the Prudential Practice Guide APG 223 and Reporting Standard ARS 223.0, focusing on how Authorised Deposit-taking Institutions (ADIs) should integrate Higher Education Loan Program (HELP) debt into home loan evaluations.

The changes are aimed at enhancing regulatory clarity and acknowledging the individual circumstances of borrowers, including the nuances of their HELP debts, without compromising prudent lending practices.

Significantly, APRA's amendments stress that borrowers with varying timelines for HELP debt repayment pose different risk profiles, with distinctions drawn between repayments expected over five years versus those anticipated within a year. These considerations allow for greater flexibility, enabling ADIs to potentially exclude HELP debt repayments from serviceability assessments for borrowers deemed unlikely to be significantly impacted by these payments over the mortgage term.

The introduction of this guidance aims to empower ADIs to develop procedures that identify when loans approved via exceptions to standard internal policy should be categorised for capital purposes as either standard or non-standard loans. APRA has set the new effective date for ARS 223.0 as September 30, 2025.

For consumers and businesses, this update is crucial as it highlights APRA's commitment to both regulatory precision and the allowance of individual borrower evaluation in the lending process, potentially influencing borrowing capabilities and mortgage affordability.

Looking ahead, these changes could signal shifts in ADI practices and the broader home lending landscape, as financial institutions may need to refine their assessment frameworks to align with APRA's guidelines. Stakeholders should stay informed about further updates and implications as the effective date approaches.

Published:Friday, 20th Jun 2025
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

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Finance News

APRA Implements Cap on High Debt-to-Income Home Loans

12 Dec 2025: Paige Estritori

The Australian Prudential Regulation Authority (APRA) has announced a significant policy change aimed at mitigating risks in the housing market. Effective February 2026, APRA will impose a cap on high debt-to-income (DTI) home loans, limiting such loans to 20% of new home lending. This measure applies to both owner-occupiers and investors, with an exemption for new housing developments. - read more

Commonwealth Bank Highlights Concerns Over Surging Home Loan Demand

12 Dec 2025: Paige Estritori

The Commonwealth Bank of Australia (CBA), the nation's largest lender, has raised concerns about the current high demand for home loans, which is contributing to escalating property prices. CEO Matt Comyn acknowledged that while the bank has benefited from the surge in housing credit, such high levels are unsustainable and could undermine long-term financial stability, housing equality, and market accessibility. He suggested that a more moderate pace of credit growth would be beneficial. - read more

Black Friday Sales Lead to Surge in Credit Card Debt Among Australians

12 Dec 2025: Paige Estritori

As Black Friday sales gain popularity in Australia, consumer advocates are raising concerns about the financial strain these events place on individuals and families. The allure of significant discounts and the social pressure to participate in these sales have led many Australians to increase their credit card debt, potentially exacerbating financial stress. - read more

ANZ's Nuno Matos Takes Helm at Australian Banking Association

04 Dec 2025: Paige Estritori

In a significant development for Australia's banking sector, Nuno Matos, Chief Executive Officer of ANZ Group, has been appointed as the new chair of the Australian Banking Association (ABA) council. This appointment marks a pivotal moment for the industry, as Matos brings a wealth of experience and a fresh perspective to the role. - read more

APRA Implements Cap on High Debt-to-Income Home Loans

04 Dec 2025: Paige Estritori

In a proactive move to address potential risks in the housing market, the Australian Prudential Regulation Authority (APRA) has announced the implementation of a cap on high debt-to-income (DTI) home loans, effective from February 2026. This measure is designed to curb the issuance of loans that could pose systemic risks to the financial system. - read more

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