This article is from the Australian Property Journal archive
THE Albanese government will instruct financial regulators to pull back on their treatment of HELP debts in serviceability requirements and debt reporting, making it easier for those with student loan debt to obtain a mortgage, while it is also directing APRA to update guidance on financing for new unit blocks in a bid to boost housing supply.
APRA will start consultation soon on the treatment of HELP debts in serviceability requirements and debt reporting, while ASIC will quickly implement changes to its guidance on the treatment of HELP debts following targeted consultation.
“These are common sense changes that will help more Australians into a home,” Treasurer Jim Chalmers said.
“We’re tackling this housing challenge from every possible angle.
“People with a HELP debt should be treated fairly when they want to buy a house and we’re working with the regulators to make sure they are.
“Currently, a barrier for young Australians to get into the housing market is the reluctance of banks to give them a mortgage.”
The government has also asked APRA to update and clarify its regulatory guidance to help unlock the construction of more units.
The announcement comes as an election nears and as the nation struggles with a severe undersupply of homes that has led to a national housing crisis.
“By unlocking more finance from the banks we’ll see more housing projects get off the ground more quickly,” Chalmers said.
Some lenders have interpreted advice issued by APRA in 2017, that finance for construction of new unit blocks should depend on all properties being pre‑sold, a statement from Chalmers said. Lenders have indicated this is a barrier to financing.
“The interpretation of this guidance as ‘100% pre‑sales’ by some lenders has limited housing supply, as smaller developers often don’t have the capital to finance the start of construction without support from the banks,” Chalmers said.
APRA will communicate to banks that while it expects banks to consider the extent of pre-sales as part of prudent credit risk management, APRA does not expect 100% pre‑sales.
National cabinet’s National Housing Accord officially launched in July with the aim of delivering 1.2 million “well-located” homes across the country over five years. However, construction capacity constraints, labour shortages and high materials costs are providing a major impost on that ambition, and the country is expected to fall potentially hundreds of thousands of homes short of the goal.
“We have heard from our members about the difficulty in accessing finance from banks without significant pre-sale of dwellings which is unsustainable in the current economic environment and is driving investment out of the industry,” Master Builders CEO Denita Wawn said.
“As we have seen in the recent increase in insolvencies in the industry, Master Builders encourages the federal government and regulators to look at other practices along the supply chain which hold back new home building and unfairly places too much risk on builders.”
