The federal government has negotiated a mortgage payment reprieve for the unemployed with the big four banks.
According to The Daily Telegraph the major banks will offer a 12 month period of relief to mortgage holders who have lost their jobs.
The banks will also consider mortgage contract extensions, repayment reductions and interest-only arrangements under the plan.
While there will be no specific scheme in place and borrowers’ cases will be judged on an individual basis, the government said it had urged the banks to provide maximum flexibility for borrowers in need.
“Banks will make assessments based on the borrower’s ability to meet new contractual obligations in the long term,” Prime Minister Rudd said.
The government said it was in discussions with building societies and credit unions about what arrangements it would offer unemployed borrowers.
While no agreement had been made with smaller banks or non-bank lenders, Mortgage Choice CEO Paul Lahiff today told The Australian that non-bank lenders were also likely to offer assistance to borrowers who lost jobs.
"Most lenders have a genuine desire to keep borrowers in their homes; the last thing a lender wants is a mortgagee sale because it involves a lot of expense and unhappiness."
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