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A recent breakdown of Commonwealth Bank of Australia’s (CBA) HECS-HELP debt serviceability changes has detailed its value for consumers.
The changes, implemented from 9 April 2025, saw borrowers with HECS debt due to be repaid within the next five years get access to a 1 per cent serviceability buffer.
Customers due to pay off debts within 12 months do not have HECS debt considered in loan applications.
While this offering is beneficial to a small number of borrowers, a recent study found it grants borrowers 21.19 per cent more borrowing power.
For an eligible single applicant on a gross annual income of $55,000 with no dependents, the previous max borrowing capacity was $286,081. It is now $346,711, adding an additional $60,630 to borrowing capacity.
For an $80,000 gross annual income, customers gain an extra $80,468 in borrowing capacity and for a $100,000 income, an additional $105,667.
Home Loan Experts’ senior credit manager Binay Lama Pakhrin said that while the policy is fresh, the target market can benefit massively.
“The policy is very new and is still in the phase of getting traction. So right now there aren’t many visible success stories. Customers are still learning about it,” he said.
“While the policy might seem like it is focused towards a specific niche, many types of borrowers will benefit.”
Pakhrin said this policy is “perfect” for refinancers: “With 44 per cent of applications in today’s market being refinances, this is a gamechanger.”
Further to purchasing a first home, this offering is ideal for renovations, future investment, or debt consolidation, said Pakhrin.
Not all lenders have passed along the policy recommendation from APRA. It’s hard to say what will and what won’t and depends upon risk appetite.
“It really depends on the lenders’ preference for risk taking and targeting,” Pakhrin said.
“Some lenders already have comparatively borrower-friendly policies. So, they might not look for further adoption. but a major bank like CBA passing on this policy is an indication that lenders are open to diversifying and assisting broader customer segments.”
Back when CBA announced the implementation of this policy, the Finance Brokers Association of Australia (FBAA) urged other lenders to do the same.
“While we understand that HECS is a debt and should be included in any loan assessment, the time left to repay the debt should be taken into consideration,” said FBAA managing director Peter White.
“Furthermore, the reduction in the serviceability buffer for those who have between one and five years left on their repayments will be a significant help and enable many to not only reach the threshold to get a loan, but to secure a higher loan that may mean the difference between securing the property they seek, or missing out.
“We urge other banks to do the same so that even more people who can afford a loan, can enter the market and increase their personal wealth.”
[Related: CBA implements HECS debt lending assistance]
