ANZ bank boss Shayne Elliott said it was “absurd” that when making loan serviceability calculations required by regulations, banks were not allowed to factor in the likelihood that a young professional borrower’s income would rise in the years after they secured a loan.

The Australian Banking Association, in a submission to a Senate inquiry into regulation and home ownership published late on Tuesday, also raised concerns about the restraint, describing it as a “particularly acute” issue for first home buyers.