The Australian Prudential Regulation Authority (APRA) has reinforced its confidence in the 3% serviceability buffer. The APRA recently conducted the final hearing for the inquiry into financial regulatory framework and home ownership on 24 October 2024. In its remarks, APRA stood by the 3% serviceability buffer, claiming it is crucial for stability.
A recent publication from APRA (February 2025) outlined that they have begun consulting on proposed changes to how banks treat Higher Education Loans (HELP/HECS) debt repayments when assessing home loan repayments. APRA has no specific rules or guidance in relation to HELP repayments beyond asking the banks to include HELP/HECS debts when reporting data on debt-to-income ratios.
Recently, CBA bank has advised that HELP/HECS debts will be excluded from serviceability. This would be excluded IF the liability would be cleared within 12 months. Hopefully, other lenders may also adopt the same methodology. Watch this space!
Tags: ARPA, serviceability buffer