Australian Real - estate & The Mortgage Freeze Scheme
Isaac Hayes - 20 March 2009One can see the similarities to the UK scheme, in which home owners can defer interest payments up to two years.
It seems that the scheme came about from a recent discussion between Wayne Swan and the major banks about measures to assist families hit by the global recession....................
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.
It was said that it was not in the bank's interest to see people "get into trouble"...............
I say again - "It was said that it was not in the bank's interest to see people "get into trouble"...........One would almost think the banks actually care about people, if it were not of the most importance to some how keep house prices from falling in a vertical fashion, which would more than likely destroy banks balance sheets...............and what will happen to the banks then?
The unemployed, will be provided with repayment holidays for six months, and in some circumstances up to 12 months, with interest being capitalized, "it was" said. Mortgage holders will ultimately have to pay the deferred payments, plus interest, and one wonders how.
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.
The Treasurer had discussions with the banks about measures to assist families experiencing hardship.
This initiative smells more like a UK copycat than anything else, and has been under consideration since January........
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 stabilize the financial system.
The Australian 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.
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.
The major banks have had to pay the federal Government more than $400 million in fees to rent its AAA sovereign debt rating.
One banker warned yesterday that capitalizing home loan interest payments for the newly unemployed could actually lead to a worse outcome if the borrower was unable to find a job.
It seems like the entire scheme is nothing but a temporary life saver.
