HOME owners who lose their jobs will be thrown a lifeline by the nation's biggest mortgage lender, which yesterday announced interest deferrals of up to 12 months to stop customers falling into arrears and triggering a wave of forced sales, The Australian reports.
The Commonwealth Bank initiative, announced by chief executive Ralph Norris at a business lunch in Melbourne, follows recent discussions between Wayne Swan and the major banks about measures to assist families hit by the global recession.
With CBA itself predicting last month that the jobless rate could blow out from its current level of 5.2 per cent to a peak of 7 per cent late next year, Mr Norris said that it was not in the bank's interest to see people "get into trouble".
"In the case of those unfortunate to be unemployed, we will provide repayment holidays for six months, and in some circumstances up to 12 months, with interest being capitalised," he said.
Mr Norris added that he could not rule out job losses at CBA because of deteriorating economic conditions.
Senior banking industry sources said yesterday there had been strong pressure from Canberra in recent weeks to develop hardship packages for customers who fall behind in their home-loan repayments.
While the Treasurer has had discussions with the banks about measures to assist families experiencing hardship, a CBA spokesman denied the bank had responded to pressure from Canberra.
"This initiative has been under consideration since January," he said.
The Government's hand in its dealings with the Big Four banks has been strengthened by the introduction of last October's deposit and wholesale funding guarantees, which have helped stabilise the financial system.
Since then, the Government has intensified pressure to pass on cuts in official interest rates to customers, as well as keep credit flowing to small and medium-sized businesses.
In the meantime, the funding guarantee has enabled the banks to raise $60 billion in offshore debt markets for on-lending to their customers, at a time when investor appetite for non-government guaranteed debt has evaporated as a result of a wave of bank failures.