John Key

New Zealand banks are being flexible with home owners and may not need government pressure to offer people a holiday on their mortgage repayments, Prime Minister John Key said.

His comments followed reports the Australian federal government had put pressure on banks to offer workers who lost their job 12-months relief from mortgage payments.

Mr Key said he would need to see the Australian proposal but the Australian-owned banks were the same ones operating in New Zealand.

"If they're going to do something in Australia I think they should be looking favourably in New Zealand."

However, he said he had talked to many of the banks' chief executives and they were trying "by and large to play a responsible role in this recession" without the need for government pressure.

If people find themselves in financial difficulty one of the first things they should do is go and talk to their bank, Mr Key said.

The banks in Australia have agreed to offer a 12-month period of relief and will also consider extending mortgage contract periods and reducing repayments, and providing interest-only repayment options on other loans.

But smaller banks, credit unions, building societies and non-bank lenders -- who make up 20 percent of the mortgage market -- are not part of the deal.

Australian Prime Minister Kevin Rudd said it would be up to the banks to decide which of its borrowers gained relief.

"Banks will make assessments based on the borrower's ability to meet new contractual obligations in the long term," he told a jobs forum in Melbourne.

The Government had asked the banks to provide "maximum flexibility" for borrowers suffering temporary hardship through "enforced unemployment".