Australia’s inflation rate has continued its downward trend, reaching a 3.5-year low in May 2025, bolstered by easing core inflation and subdued tradable goods prices. However, recent increases in petrol prices are beginning to influence inflation expectations.
Analysts warn that if global oil prices continue to rise, domestic petrol prices could climb significantly, potentially reaching $2.20 per litre. Such increases could complicate the Reserve Bank of Australia’s efforts to manage inflation and interest rates.
It’s potentially another curious case of inflation being fuelled (pardon the pun) by influences other than the spending habits of Australian’s, and yet still forms part of the inflation equation which influences interest rates.
In this week’s newsletter, we take a look at new guidelines set to come into place on the 30th of September designed to give borrowers with student debt a fairer chance to enter the property market.
The Australian Prudential Regulation Authority (APRA) has introduced new guidelines to make it easier for people with student loans (HELP debts) to get a home loan.
Under the changes, banks must now exclude HELP debts from the total credit limit when calculating a borrower’s debt-to-income ratio (DTI). This means a student loan won’t make your overall debt look higher when applying for a mortgage.
Impact on serviceability
When it comes to assessing whether a borrower can afford their home loan repayments), banks can also choose to ignore HELP debt repayments in some cases. For example, if someone is likely to pay off their student loan within 12 months, banks may reasonably decide to exclude those repayments from the assessment, as the debt won’t significantly impact the borrower’s ability to repay their home loan over time.
APRA expects banks to have strong processes in place for handling these exceptions, ensuring they carefully consider the risks and apply the policy consistently. If a bank decides to ignore student loan repayments in their assessment, APRA generally considers this loan to still meet standard lending requirements.
The new rules will officially apply from 30 September 2025 and aim to give borrowers with student debt a fairer chance to enter the property market without being unfairly restricted by their HELP loan balance.
While student loan repayments will still reduce a borrower’s available income, they no longer need to count as part of the total credit limit when calculating borrowing power.
Must lenders adopt the guidelines?
Lenders will be required to comply with the key parts of the new guidelines, particularly those that are being formally written into APRA’s reporting standards and prudential expectations. Specifically:
- Excluding HELP debts from the credit limit when calculating debt-to-income ratios (DTIs) will be mandatory.
- The flexibility around serviceability assessments is optional. APRA allows lenders to use their judgment when deciding whether to exclude HELP repayments from serviceability calculations. For example, a lender can choose to disregard HELP repayments if the borrower is expected to clear the debt within 12 months, but lenders aren’t forced to do so. They can decide based on their lending policies, risk appetite, and individual borrower circumstances.
So, while some aspects are enforceable, others leave room for lender discretion.
Variable
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR.
1 Year Fixed
The rates below are based on a $500,000 loan, with the borrower making principle and interest payments with a loan term of 30 years. The rates quoted may vary depending on the borrowers LVR. At the end of the three year fixed period, the borrowers interest rate will revert to a standard variable rate for the life of the loan.
