Ominous sign for stricken homeowners

Photo / Brett Phibbs

Property website Realestate.co.nz says mortgagee sales are on the rise again, and the worst may not yet be over.

Over the past three years, the site had been tracking properties listed for mortgagee sale and said in the last quarter the number of stricken homeowners was once again on the way up.

Latest figures of transactions compiled by Terralink showed there were 202 mortgagee sales in June, down from 260 in May and 289 the previous June.

Mortgagee sales peaked at nearly 350 in September last year.

But the website believed what had been a steady downward trend was now reversed.

It recorded 250 mortgagee listings in May. That rose to 321 this month, said chief executive Alistair Helm.

Eleventh-hour settlements over properties were sometimes reached so it wasn't possible to tie listings to sales one-for-one. "[But] it's a good indicator of what the supply side is doing," he said.

Mortgagee sales were a key barometer of the economic situation and there could be more bad times to come.

"This is something I've been watching in the US. There's a lot of lag in the impact of financial fall-out."

People had struggled on but the recent rises in interest rates could have been the straw that broke the camel's back for some.

Westpac economist Dominick Stephens was not surprised by the figures and agreed the interest rate rises had an impact.

Keeping your home or business was all about cash flow and some people may not have been able to hold on long enough.

"It's like you're holding your breath and you're rising towards the surface, but some households may not get there."

However, the Reserve Bank was not increasing interest rates as fast as had been expected so the outlook was not as bad.

"The latest trend has been quite a sharp reduction in mortgage rates, so I think desperate households will be able to hold on for longer than previously anticipated."

Also, the number of mortgagee sales was nowhere near as high as it had been in previous recessions, he said.

"They've been extraordinarily low for such a large change in the housing market and a big change in employment."