The more articles we see like this where the government is legislating banks must assist those that can't afford payments, the tighter lending criteria will get.
I doubt the government has any idea that they are actually limiting who the banks can now lend to further. Cashflow is king at the moment and legislation like this kills cashflow for the banks.
http://www.smh.com.au/national/overhaul-brings-relief-for-mortgage-holders-20090427-ajl3.html
An overhaul of consumer credit rules to be announced today will make it easier for people who lose their job to envoke a "hardship" clause to seek relief from demands to meet mortgage and other loan replayments.
As the Treasurer, Wayne Swan, warned that unemployment "will certainly go up", the Federal Government is moving to ease the stress on home buyers who find themselves unable to meet mortgage repayments.
The Minister for Corporate Law, Nick Sherry, will announce an increase in the threshold for people to qualify for financial hardship from $312,400 to $500,000.
Senator Sherry said the change was aimed at helping people to keep their home even if they lost their job.
People will be able to apply to their bank or financial institution to negotiate a way to cope. It might include extending the term of the loan to lower repayments or a repayment holiday.
"If homeowners find themselves in financial hardship they will be able to request help," Senator Sherry said.
"Front and centre of our national consumer credit protection regime will be a deramatic increase in the monetary thresholds under which consumers can get help if they are struggling with a mortgage."
"Many families may be missing out on the help these hardship provisions can provide – help that may keep people in their homes during challenging economic times."
The hardship scheme also applies to people who become ill and covers credit cards and personal loans.
The four main banks have signed up to the scheme.
The National Consumer Protection Act is expected to begin on November 1 and will also set down rules for the disclosure of fees and charges for financial products and streamline rules for credit cards and payday lending.
Banks and other lenders will be required to sign up to responsible lending provisions.
