APRA is consulting on changes concerning how authorised deposit-taking institutions (ADIs) take into account Higher Education Loan Program (HELP) debt repayments when assessing home loan applications.

Current industry practice is to consider HELP debt obligations as part of residential mortgage serviceability assessments.

APRA proposes to clarify in guidance that it is reasonable, by exception to internal serviceability criteria, for an ADI to remove HELP repayments where a borrower is expected to pay off their HELP debt in the near term through the compulsory repayments deducted from gross income. This exception would be on the basis that the borrower will largely be unaffected by the repayments over the course of their mortgage, given the near term and income-contingent nature of the debt.

APRA’s baseline expectation is that ADIs continue to consider HELP repayments in serviceability assessments, especially where the HELP debt is not expected to be repaid in the near-term.

Draft versions of Reporting Standard ARS 223.0 Residential Mortgage Lending (ARS 223.0) and Prudential Practice Guide APG 223 Residential Mortgage Lending (APG 223) have been released.

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Author: David Jacobson
Principal, Bright Corporate Law
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The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.