KEY POINTS:
A surge in mortgagee sales is surprising even seasoned real estate agents, with one dealing with 70 forced sales in three months this year - compared with 12 for the whole of 2007.
Other data collected by property experts shows mortgagee sales nationally rising almost 20 per cent in the past week as banks foreclose on families and property investors hit by crippling interest rates and the rising cost of living.
Bernard Hickey, manager of the website interest.co.nz, told the Herald on Sunday that, over the past six weeks, forced home sales advertised on two popular property websites had increased 55 per cent, though mortgagee sales were still a small number in the overall market.
Hickey said that as the real estate market slows, many home owners who overextended themselves during the property boom were finding banks more demanding.
He said investors were worst affected and predicted tough times for those who had "mortgaged themselves to the hilt".
"Those interest rates are not going to come down any time soon."
Other sectors of the industry were also noticing the increase.
A mortgage broker who specialises in preventing mortgagee sales, Jeff Royle, this week visited a family left owing $700,000 to a major bank. He says Kiwis have a "unique" attitude to debt - we ignore it.
He said too many people don't try to negotiate with their banks until they receive a final notice, after months of ignoring the problem. "Quite often that's the first time that people know anything about it, which is crazy. People get into an ostrich-like mentality."
Royle said most mortgagee sales used to be the result of "life-changing events" such as divorce, redundancy or illness. But he said that could change over the next few months. He frequently visited families in trouble only to find Sky TV playing on large flat-screen TVs.
Real estate agents said they were noticing more mortgagee sales in usually safe areas. Auckland agent Tony Bayley has eight mortgagee sales on his books, compared with one this time last year. He has seen advertisements for mortgagee sales on larger homes in usually sound areas such as Auckland's Remuera and St Heliers and advised the owners to talk to someone.
"Unfortunately most people leave it until it's too late, they bury their heads in the sand."
Ray White Hamilton agent Lynn Eager has 70 on his books so far, compared with 12 to 14 for the whole of 2007. He said most of his mortgagee sales were property investors who were overstretched.
Eager said it was typical to see a slight increase in mortgagee sales around May and June as banks would give homeowners a few months' leeway after an expensive Christmas.
But finding your feet was becoming more difficult in tough economic times. David McGall of Monarch Real Estate in Hamilton said people could no longer turn to a different finance company when they got into strife with the bank.
