The Government will work with the big banks to help those who have lost their jobs with their mortgage repayments.
The scheme will see jobless Australians eligible for mortgage relief for up to a year, with the four big banks NAB, Westpac, the Commonwealth and ANZ agreeing to postpone loan repayments for up to 12 months.
The move is seen as a way to cut down on mortgage defaults and forced home sales that normally accompany rising unemployment.
Rudd believes that the move will help families through the economic slowdown.
“Whether you’re a banker or a battler, it’s in every Australian’s interest that we pull together because that’s the only way we will see the nation through these tough global economics.”
In a community employment forum in Melbourne over the weekend, Mr Rudd discussed the reasons behind the move.
“The immediate problem facing many families whose breadwinners have lost their jobs is the anxiety and fear that arises from, ‘How do I pay my mortgage, how do I pay off my car?
“That’s why, some time ago, I asked the Treasurer to negotiate an agreement with Australia’s big-four banks on a comprehensive package of assistance to workers who lose their jobs.”
The scheme will see mortgage repayments postponed for up to 12 months, with interest to be capitalised into the loan. In addition to this, the big banks are also considering extending the period of mortgage contracts and reducing payment amounts.
The move signals a huge win for Australian families battling through the crisis. However, the agreement does not include regional banks or non-bank lenders.
Paul Lahiff, chief executive of mortgage broker Mortgage Choice, said the assistance package could be a “short-term competitive disadvantage” for non-bank lending institutions.
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