Alliance backs calls for mortgage help for jobless

Alliance Party media release FOR IMMEDIATE RELEASE Monday 6 April 2009

The Alliance Party is backing calls for banks to give a break to struggling borrowers who lose their jobs.

Alliance Economic Development spokesperson Quentin Findlay says the finance sector union FINSEC is right to demand that banks help workers who lose their jobs in the current recession.

The Australian Government has offered a reprieve on mortgages and car loans to people who lose their jobs, after it brokered a deal with banks in exchange for its bank guarantee scheme.

Mr Findlay says that moves by the Australian Government were the right thing to do to help workers.

"But while Australian banks are being told to play their part, New Zealand is still being told to sit and wait by the National Government."

While the Government considers the possibilities, time moves on for the rest of us, Mr Findlay says.

Mr Findlay says some people who tried to ease their financial burden by shifting between fixed and floating rates were being heavily penalised by some banks for doing so.

“There have been several investigations into the mortgage issue, most notably by the Sunday Star Times, which show that banks are being inflexible when people try to restructure their debts.”

He says that mortgagee sales had risen from 28 sales in January 2007 to 150 in January 2009. This was an increase of 275 percent, and with unemployment tipped to rise as high as 9 percent in some estimates the worst was still to come.

“Mortgagee sales will increase and there will be more people wanting to shift between fixed and floating rates."

Mr Findlay says banks needed to be socially responsible and could not be allowed to gouge profits in a time of recession.

"Most banks in New Zealand are in private overseas ownership and are only after profits for their overseas shareholders."

He says taxpayers are propping the banking system up both here in New Zealand and globally through banking guarantees.

"If private banks receive public money, they should expect a degree of public control.”