John Key

(Adds comment from post-cabinet press conference)

Wellington, April 6 NZPA - 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 today.

His comments followed reports the Australian federal government had put pressure on banks to offer workers who lost their jobs 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".

Mr Key said at his post-cabinet press conference he had not yet seen the fine details of the Australian proposal and he did not know whether the federal government was changing any of the conditions imposed on banks which were using deposit guarantee schemes.

He said his own experience, through his local electorate office, was that the New Zealand banks were honouring their commitment to be flexible and treat borrowers reasonably.