Having a university HECS debt will no longer be seen as a major barrier by banks to entering the property market.

At the urging of the Federal Treasurer, APRA, the financial regulator, will tell banks they can exclude HECS repayments from serviceability assessments for home loans if the debt is to be paid off in the short term. In these circumstances, it will be excluded from debt-to-income reporting purposes.

Previously, banks had some issues when lending to borrowers with HECS debts as repayments of those loans change as the borrower’s income changes.

Australian Banking Association chief executive Anna Bligh says the changes may unlock more credit for some borrowers while Treasurer Jim Chalmers believes it will help more young Australians buy a home. “We need to recognise that student debt is different to other kinds of debt,” he says. “We want to make sure that people with student debt aren’t disadvantaged when it comes to getting a mortgage.”

About 3 million Australians have a HECS debt, with the average debt being $22,000.