The federal government has now written to the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC), with the regulators reviewing their loan guidance to banks.

APRA will advise banks to exclude HECS repayments from serviceability assessments if they expect a borrower will shortly pay off their debt.

How are loan debts considered in mortgage claims?

The shift would ensure student debt would no longer be treated like an unsecured loan, previously placing it in the same category as credit card or buy-now-pay-later debt.

Housing Minister Clare O’Neil hopes the change in advice to banks will make it easier for more Australians to secure their first home loan. Source: AAP / Mick Tsikas

Housing Minister Clare O’Neil said the changes will mean aspiring homeowners aren’t “overly impacted by student loans”.

“This is a common-sense measure that will make a material difference to first home buyers, giving them more borrowing power to get into their own home sooner.”