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From 30 September 2025 APRA expects lenders to no longer consider HELP debt when servicing mortgages if the repayments are expected to be complete within 12 months.
Back in February, APRA and ASIC began consulting on changes to lending rules to allow for those with student debt to responsibly take out a mortgage.
APRA received eight submissions in response to this consultation. Respondents were reportedly in favour of the changes, though they sought some adjustments and clarifications.
Factoring in the consultation, APRA updated its Prudential practice guide APG 223 Residential Mortgage Lending.
“APRA expects an ADI to consider a borrower’s HELP debt obligations alongside other debt commitments when assessing their borrowing capacity. This is because HELP repayments are deducted from gross income and are not available to service a mortgage,” said APRA.
“However, APRA considers it is reasonable for ADIs to take into account the individual circumstances of the borrower and the nature of their HELP debts. In that case, APRA expects this to be determined by an ADI in accordance with their lending policies, risk appetite, and after considering the individual circumstances of a borrower.”
According to the updated guide, an ADI may consider it reasonable to remove HELP repayments from a serviceability assessment where a borrower is expected to pay off their HELP debt within 12 months.
“This loan serviceability override would be on the basis that the ADI considers the borrower will be largely unaffected by HELP repayments over the remaining term of their mortgage considering the near-term repayment of, and income-contingent nature of, outstanding HELP debt. APRA expects ADIs to have prudent frameworks for dealing with overrides including relating to HELP debts,” said APRA.
The regulator published some submissions from those in and around the industry.
NAB, Suncorp, the Customer Owned Banking Association, and the Australian Banking Association were all in support of removing HELP repayments from debt reporting.
CBA implemented the recommendations back in April, no longer considering HELP debt if it is due to be repaid within 12 months.
Following this policy change, eligible borrowers were reportedly granted 21.19 per cent more borrowing power.
“While the policy might seem like it is focused towards a specific niche, many types of borrowers will benefit,” Home Loan Experts’ senior credit manager Binay Lama Pakhrin said.
Following APRA’s recent adjustments and commencement date, more lenders will likely follow suit by implementing the debt waiver.
[Related: Regulators to update HELP debt guidance for mortgages]
