The HEM benchmark explained

What HEM is

ASIC's 2019 consultation paper on its responsible lending guide (CP 309) describes HEM as developed in 2011 by the Melbourne Institute of Applied Economic and Social Research at the University of Melbourne. It says HEM uses the median spending on "absolute basic" goods and services (for example most supermarket food, children's clothing and child care) combined with the 25th percentile of spending on "discretionary basic" items (for example alcohol, eating out, domestic travel and adult clothing). It describes HEM as a low-end estimate of the spending habits of Australian families. The Full Federal Court judgment adds that the benchmark was compiled from Australian Bureau of Statistics Household Expenditure Survey data and excludes "non-basic" spending.

CP 309 also records that HEM was developed as an alternative to the Henderson Poverty Line, and that the Melbourne Institute noted it is a conservative estimate of what modern Australian families consume, excluding expenditure on housing.

I have not listed HEM dollar amounts because they are produced for lenders, vary by household type and income, and change over time. I did not find a public official table.

HEM versus declared expenses

In practice, the exact use differs by lender. Ask yours whether it uses your declared expenses, the benchmark, or whichever is higher. I did not find an official source that states which is more common today.

What ASIC and the courts say

ASIC's RG 209 sets out its views on the responsible lending obligations (guide issued 9 December 2019). I could not read its full text for this guide, so check ASIC's page. These are the official statements I could read:

• In CP 309 (February 2019), ASIC proposed to clarify that a benchmark figure gives no positive confirmation of what a consumer's income and expenses are, but that benchmarks can help determine whether the information is plausible. That was a proposal, so check the final RG 209 wording.
• In ASIC v Westpac [2020] FCAFC 111 (26 June 2020), the Full Federal Court said HEM can have some utility when assessing serviceability, but "cannot be used as a substitute for inquiries or verification" directed to the consumer. It described HEM as at best an indirect check on a consumer's living expenses.
• The court also noted that HEM is an estimate of the level of expenditure a consumer could be expected to spend, not an estimate of that consumer's actual expenses.
• ASIC said after the judgment that it would review RG 209 and consider what the decision means for its guidance (media release 20-166MR). I did not find the outcome.

In short, a lender that uses a benchmark still has to look at you. Your declared expenses are not disregarded because a benchmark is higher or lower.

What this means for you

• Be accurate. Round figures that are far below typical household spending may lead a lender to ask more questions or to use a higher figure.
• Include genuine costs such as childcare, insurance, and school fees. Ask the lender whether any are outside its benchmark and so need separate evidence.
• Do not understate to borrow more. The loan has to be repaid from your real budget.
• If you are offered less than you expected, ask whether living expenses, a credit card limit or the buffer was the limiting item. See how lenders assess serviceability.

A lender then tests repayments at a higher rate: see the APRA serviceability buffer. As at 2 Nov 2026, RateSonar's median advertised variable rate is 6.74%, and a $600,000 loan over 30 years at the median plus 3 points would repay $5,151 a month, $1,263 more than at the median (RateSonar's arithmetic, not a lender's assessment). Compare loans on live rates.