Banks are currently required to take student loan debt into account when assessing loan prospects, despite repayments only kicking in above a certain wage threshold, adjusted each year.

The Australian Prudential Regulation Authority will also knock HECS debts off their reported definition of debt to income, which can affect loan eligibility.

The Australian Banking Association has said it welcomes the news as a constructive step to help more people toward home ownership – and obtaining bank loans.

“Our industry welcomes this move and the clarity it will provide for banks when they are making lending assessments,” CEO Anna Bligh said.

“Banks support responsible lending rules to protect borrowers and ensure they can repay their loans. However, there is always merit in carefully considered updates to regulatory guidance that may help some Australians safely access more credit.

“Whilst the challenges of reducing barriers to home ownership won’t be solved by one single factor, these clarifications should assist in unlocking more credit for some of those looking to enter the property market.”

Chalmers’ announcement will be the latest shot fired in an ongoing battle to seize the housing high ground between the government and the opposition.

Recent polling obtained exclusively by 9News showed 73 per cent of people said housing affordability was important to their vote.

The Coalition has put forward a proposed policy of allowing people to take money out of their super fund to buy a home, while the Labor government has passed a $10 billion Housing Australia Future Fund to finance more public housing.

The property market continues to boom around the country despite slight softening in major markets such as Sydney.

Homeowners are also hanging on to the hope of an interest rate cut from the Reserve Bank of Australia next week.

Said cut would also likely be of benefit to the Albanese government, as a sign that inflation has sufficiently decreased to let the pressure off voters.