Westpac CEO welcomes changes to Australia’s home lending regulations

The bank suggested a more flexible approach to risk tolerance in property construction in select cases.

Westpac’s CEO has welcomed changes to Australia’s home lending regulations announced on 12 February 2025, saying that they will help improve the housing supply.

“Long-term and chronic structural obstacles have made the cost and risk of building new homes unattractive for many builders and developers,” Westpac CEO Anthony Miller said in a statement posted on the Australian bank’s official website.

The clarification on pre-sale requirements will offer greater certainty to move quickly on developments and construction, Miller said.

Changing the treatment of HELP loans in serviceability assessments will assist aspiring home buyers, he added.

In a submission to the Senate Economics References Committee, Westpac said that it sought greater flexibility with risk treatment in property construction to prevent scenarios where regulatory barriers may impede its ability to provide lending within risk appetite.

Westpac made seven recommendations in total, including targeted government-backed support measures for developers and contractors of low to medium value residential stock; expedite the work agreed under the National Planning Reform Blueprint; and for APRA to adopt a more flexible approach to risk tolerance in property construction in “a small number of cases where it occurs.”

For the latter, Westpac particularly zeroed in on pre-sales. The bank said that it has worked with APRA in recent years to revise its policy on required levels of pre-sales.

“We believe there is opportunity for further flexibility on pre-sale levels with support from APRA,” Westpace wrote in its submission.

“The private credit market, which provides an important and alternate funding source for developers, has no such prudential regulatory constraints around pre-sales, but this impacts the price and finance terms available to developers and builders,” it added.