Help for those on HELP loans?

Federal Treasurer Jim Chalmers released a statement in February calling for financial regulators to update their guidance policies and make it easier for Australians with a Higher Education Loan Program (HELP) loan to take out a mortgage.

However, the devil is in the details as to whether this was simply an early election gambit or a genuine attempt to shake loose some much-needed change to hand the housing ladder ferryman.

“Currently, a barrier for young Australians to get into the housing market is the reluctance of banks to give them a mortgage,” Dr Chalmers said.

“The Australian Banking Association has indicated one reason for this uncertainty is the interpretation of lending regulations and guidance by the Australian Prudential Regulation Authority (APRA) and the Australian Securities & Investments Commission.”

HELP loans can significantly hinder borrowing power, with Loan Market Finance Broker Mick O’Shea estimating the reduction in borrowing power to be in the realm of $45,000-50,000 for an annual household salary of $100,000.

But unlocking more financing for those chained down by education loans poses a great challenge – least of all for APRA.

While it has no specific rules in relation to HELP repayments beyond asking banks to include HELP debts when reporting data on debt-to-income ratios, the APRA recognises HELP debts are unique due to repayments being income-contingent, meaning a borrower’s repayment obligations are determined by their income and not the size of debt.

The first suggestion from APRA was removing HELP debts from debt-to-income reporting.

The second was to clarify banks could exempt a loan applicant’s HELP debt in cases where they were expected to pay off their debt soon.

However, Mr O’Shea said even if HELP was discounted for lending purposes and helping with one’s borrowing capacity, it did not change the amount of disposable income coming into any given household.

While HELP loans pose a significant barrier to home loan accessibility, he argued there were other, more pressing, challenges for first homebuyers – the biggest being raising a deposit.

As for what the potential HELP loan changes could mean for the property market, Marron Real Estate Principal and Licensee Rhett Marron said discounting the HELP loan rate would be a good tool to use to stimulate it.

“It would certainly increase the number of players in the market in a manner not dissimilar to the effect the First Home Owner Grant has had in the past,” he said.

“This will generally lead to more competition in an already competitive market, plus lead to an increase in sales prices.”

However, turning up the competitive heat in a market mired by supply issues has the potential to exacerbate the nation’s current stressors on housing affordability.

This is why NAB Home Ownership Executive Andy Kerr said it was critical to address both demand and supply-side measures together to help more Australians buy a home.

“The initiative will help boost borrowing capacity for first homebuyers, however housing supply remains the most significant challenge,” he said.

As it appeared in the 2025 April 26 edition of The West Australian.