Election 2025: Peter Dutton’s bid to be the new home loan ranger

The Opposition Leader will force the financial regulator to ease its overly cautious lending rules for home buyers that have been locking more and more people out of home ownership since the pandemic.

Opposition Leader Peter Dutton in Newcastle on Monday. Picture Thomas Lisson / NewsWire

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Peter Dutton will direct the financial regulator to ease onerous home lending rules that are ­considered to be locking ­Australians out of the market and creating a class of “mortgage ­prisoners”, as the Liberal leader goes in to bat for young buyers who don’t have access to the “bank of mum and dad”.

Declaring that the housing market has become biased in favour of inherited wealth, opposition housing spokesman ­Michael Sukkar has pledged to rewrite the rule book for borrowers to allow greater access to home ownership if the Coalition is elected on May 3.

The housing shake-up will be the first in a sweep of new policy offerings over coming weeks ­designed to appeal to the outer suburbs that Mr Dutton sees as the future of the Liberals’ ­election-winning base.

Setting new ideological battlelines over one of the most contested policy areas, the Coalition would, as one of its first tasks in government, direct the Australian Prudential Regulation Authority to lower the current serviceability buffer that requires lenders to ­assess a home loan applicant’s ability to repay a loan.

It was raised to 3 per cent in 2021 when the cash rate had dropped to just 0.1 per cent during the Covid pandemic. Prior to that it was 2.5 per cent, having risen from 2 per cent in 2014.

Mr Sukkar told The Australian the setting was no longer fit for purpose and was proving a barrier for young buyers trying to access the home market now that the cash rate had risen to 4.1 per cent, while making it harder for existing mortgage holders to refinance loans. The Coalition would direct the regulator to adjust the capital treatment of loans backed by mortgage insurance as set by a lender’s loan-to-value ratio, which artificially raised interest rates for some borrowers who didn’t have access to parents’ ­financial assistance. This would be done by rewriting the regulator’s Statement of Expectations.

“Right now, Australians without access to the ‘bank of mum and dad’ are punished by higher borrowing costs – even when the actual risk is the same or lower,” Mr Sukkar will tell a property conference in Melbourne on Tuesday. “That’s a systemic bias in favour of inherited wealth. We will remove it. The Coalition will not accept a situation where a generation of Australians do not have the same opportunities for home ownership that previous generations have enjoyed.”

Mr Sukkar will say that access to finance is becoming almost ­unattainable for the typical ­worker amid restrictive and cumbersome lending regulations.

“This is not about compromising stability or independence,” he will say. “APRA’s core mandate remains. But the Statement of ­Expectations is the government’s tool to ensure the regulator also supports broader economic objectives – like home ownership and fair access to finance. A Coalition government will use that tool ­because we believe the financial system should enable aspiration – not entrench inequality.”

Anthony Albanese speaks during a radio interview in Perth on Monday. Picture: AAP

Mr Dutton last week sought to resurrect the Menzies-era dream of home ownership, pledging to be the prime minister for housing ­affordability if elected.

Mr Sukkar will seek to pin the housing affordability crisis on the Albanese government. “Labor’s financial system is locking too many Australians out of home ownership – not because they can’t afford a mortgage, but ­because the rules are too inflexible,” he will say. “A Coalition government will start that reform by resetting APRA’s Statement of Expectations. We will make it clear that APRA must consider the impact of its rules on access to housing – particularly for first-home buyers.”

Mr Sukkar will say that a “one size fits all” rule is stopping “tens of thousands of Australians from getting a home loan – even when they can meet the repayments with a prudent margin against unexpected future rates rises”. “That’s not good regulation; it’s a barrier to aspiration,” he will say.

Mr Sukkar will also vow to ­direct APRA to adjust the capital treatment of loans backed by lenders mortgage insurance which he says is artificially forcing some borrowers into higher interest rates. Lenders mortgage insurance is usually required when a person is seeking to borrow more than 80 per cent of the value of the property.

It comes as the Coalition promises to scrap billions of dollars earmarked for the Victorian Suburban Rail Loop and instead team up with the state Liberals and Nationals to pour $3bn into Melbourne’s airport rail link.

Housing Minister Clare O’Neil will use her keynote ­address to the same conference Mr Sukkar will speak at to rally support from Australia’s biggest developers and investors to help drive Labor’s Build to Rent program, which promises 80,000 homes over a decade.

With domestic super funds wary of investing over concerns about returns, the value of Build to Rent stock in the residential housing sector remains low at 0.2 per cent, compared with 5.4 per cent in Britain and 12 per cent in the US.

Ms O’Neil will tell the conference that one of the government’s last acts before parliament was dissolved was to sign-off on the final Build to Rent regulations “to give you all the confidence to start investing”.

The regulations will lower tax rates, define how the 10 per cent affordable housing will operate and cement a role for community housing providers to manage the affordable tenancies.

“Many of the 8600 Build to Rent homes operating and the 17,500 under construction will take up our lower tax rates, in turn making 10 per cent of those homes available to people who need some support,” Ms O’Neil will say.

She will tell property industry leaders that a Coalition government would be a “recipe to make the housing crisis worse” by raising taxes for Build to Rent properties and scrapping Labor’s $10bn Housing Australia Future Fund, $6.3bn Help-to-Buy scheme and $3bn housing support program.