According to Jared Morgan in yesterday's Southland Times, a mortgagee sale would be a last-resort option for the Southland Building Society as the slowing economy placed greater financial pressures on homeowners.

New Zealand's newest registered bank, the Southland Building Society, has joined other banks in promising to relax mortgage conditions as part of a Government-brokered deal guaranteeing banks' overseas debts.

Announcing the wholesale funding guarantee on Saturday, Finance Minister Michael Cullen said the Government would guarantee wholesale bank deposits in a scheme it hoped would stop the financial system running out of cash. At the same time, it secured a deal with banks to go easy on mortgage clients hurt by the recession.

Southland Building Society chief executive Ross Smith said SBS Bank shared the Government's focus on the importance of home ownership from both an economic and social perspective."The basis on which building societies were founded was that of making home ownership easy, so it is fundamental to our existence," Mr Smith said. "We understand that in an economy with a weak housing market and the potential for rising unemployment, the likelihood of a rise in servicing difficulties amongst our borrowers is high."

The society had always worked with customers to assist them during times of difficulty and it would continue to work with them until it ran out of options, Mr Smith said.

"Personal values are important to us and the most important action a customer can take is to make us aware of any impending difficulties at the earliest possible time, so that we can move quickly to address the problem," Mr Smith said.