Australia offers relief for jobless mortgage holders

Monday 6th April 2009

Australia will allow mortgage-holders who lose their job to postpone loan payments for as much as 12 months under an agreement with that nation's major banks.

Treasurer Wayne Swan said the government reached agreement with Commonwealth Bank of Australia, Westpac Banking Corp., Australia & New Zealand Banking Group and National Australia Bank, who collectively account for about 80% of the mortgage market.

"While Australia is weathering the global recession better than most countries, we are not immune from its impacts, and one of these is that unemployment is forecast to rise," Swann said in a statement posted on his website. The move will help "cushion our people from the worst the world can throw at us."

The mortgage relief package is part of the A%950 million in aid pledged by Prime Minister Kevin Rudd over the weekend, which includes A$650 million for a jobs fund to upskill workers who lose their jobs.

Under the proposal, interest on deferred payments would be capitalized into the loan, contract terms could be extended or payments reduced, fees waived and temporary overdraft facilities put in place, Swan said.

Talks are also underway with credit unions and mutual building societies, which already have procedures for members facing hard times, Swann said.

In New Zealand, the union representing bank workers, Finsec, called the Australian plan a win-win deal and called on the banks to offer similar leeway to New Zealand customers.

"The mortgage holiday gives workers who have been made redundant a real breather while they get back on their feet," said Finsec Campaigns Director Andrew Campbell. "As the interest still accrues during that year the banks don't miss out either. What's not to like about an arrangement that can keep people in their homes during the recession?"

By Jonathan Underhill

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