Labour leader Phil Goff says banks need to be more flexible when dealing with people who are struggling to pay their mortgages.
Mr Goff says the people most likely to get into difficulty are those who bought homes in the last two or three years.
A lot of people are locked into high-interest mortgages, he says, which puts them at financial risk if their partner loses their job; and many banks are charging hefty fees for renegotiating mortgages.
The banks should meet people halfway and the Government should be encouraging them to do so.
Labour lost touch, Goff admits
As the Labour caucus meets for a two-day retreat in Auckland, Mr Goff is admitting that the party lost touch with the electorate in 2008.
It is proud of its achievements, he says, but prepared to acknowledge that it made mistakes and enormously motivated to reconnect with New Zealanders.
The party intends to earn the right to govern again, Mr Goff says.
A major focus of the caucus meeting is the economic agenda for 2009.
The Labour leader says the party wants to participate constructively in plans to help protect New Zealand jobs and living standards.