APRA has published changes to Prudential Practice Guide APG 223 Residential Mortgage Lending and Reporting Standard ARS 223.0 Residential Mortgage Lending relating to how ADIs consider Higher Education Loan Program (HELP) debt when assessing home loan applications.

APRA says its changes have two objectives: the first is to provide regulatory clarity on how HELP debt should be considered under APRA’s prudential and reporting frameworks and the second is to reaffirm the flexibility available to ADIs to consider the individual circumstances of borrowers, including the nature of their HELP debts, while maintaining prudent lending practices.

APRA observes that a borrower with a HELP debt expected to be repaid in 5 years would have a different risk profile from one expected to repay this debt within 12 months.

The amendment to APG 223 intends to provide ADIs flexibility to remove HELP debt repayments from serviceability assessments where the ADI considers the borrower will be largely unaffected by HELP debt repayments over the term of the mortgage.

APRA expects an ADI to have appropriate processes in place to determine whether loans approved through overrides to internal policy would be treated as a standard or non-standard loan for capital purposes.

The effective date of the revised ARS 223.0 is 30 September 2025.

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Author: David Jacobson
Principal, Bright Corporate Law
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The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.