There seems to be this strange ideal that banks were'nt banks 10, 20, 30 years ago or more.
Nothing could be further from the truth.
They gave easy credit when it suited them, and they squeeze when it suits them.
If the bank lenders were in trouble and call up their loans, hardly anybody would be able to pay up.
They have no use for property so they'd have to sell it on the market and property will become worthless and they'd be in a worse situation.
The only reason the banks do anything is because it beneficial to them.
With RBA pumping $$ into them and Kevin Dudd proping them up, they can forfeit some interest payments for a while, while it keeps compounding for the customer.