A set of principles to assist borrowers that are experiencing financial difficulties during tough economic times has been signed by retail banks, building societies and credit unions.
All 144 retail banks, building societies and credit unions joined Australia's big four banks in the government's principles to assist borrowers.
Mr. Swan stated that the Principles would provide support and assistance to borrowers who were struggling to meet mortgage repayments due to temporary unemployment or other factors related to the global recession.
Although Australia seems to be weathering the global recession better than most countries we are still not immune to its effects, including an unexpected risk in unemployment.
The Government had made an agreement with ANZ, Commonwealth Bank, National Australia Bank and Westpac in April to sign up to these principles. All members of the Association of Building Societies and Credit Unions (Abacus) and all retail members of the Australian Bankers Association (ABA) with a focus in the mortgage market are now signatories to the principles.
This agreement allows financial institutions to offer a range of options to assist mortgagees who are facing financial hardship.
Some of these options include:
Mr. Swan further added that these options would not apply to every case, and that financial institutions would make assessments based on the borrower's ability to meet new contractual obligations in the long term.