NZ foreclosures

Record mortgagee sales a 'genuine cause for concern'

A record number of property owners are being forced to sell up as banks move to foreclose in mortgagee sales.

TVNZ,

9 June, 2012

New figures published today by Terralink International show there were 524 mortgagee sales in the first three months of this year - the highest first quarter number on record and almost six a day.

Terralink managing director Mike Donald said the figures were "genuine cause for concern" and worse than during the same period in 2010, at the height of the recession.

They indicated the economy was still struggling to pick up and he expected more cash-strapped homeowners to lose their properties in forced sales.

"How many other properties are close to being forced into this situation? We can't answer that question.

"The concern is that while we think we may be through the effects of the recession, it's still proving to be pretty tough out there."

The figures indicated the economic recovery may be a long way off, with banks trying to "drip feed" forced sales to avoid flooding the market with cheap properties and depressing prices.

"In fact, things have never been worse for property owners. I challenge anyone to look at these figures and tell me things are getting better," Donald said.

With 41 foreclosures, Wellington recorded a 71% jump compared with the first quarter of 2011. The number of mortgagee sales in Northland jumped 155% (from 20 to 51) and 153%in Otago (from 15 to 38).

However, some regions, notably Hawke's Bay and Canterbury, experienced a modest decrease during the quarter.

Donald said the one silver lining was that the number of "mum and dad" home owners facing mortgagee sales appeared to be easing.

Banks seemed to be targeting property investors who owned multiple properties.

"The figures indicate this group is under significant pressure, a reflection, perhaps, of reduced equity as property values flatten or decline, and increased pressure on cash flows."

However, BNZ chief economist Tony Alexander said the mortgagee sales figures held little correlation with the buoyant property market.

With a shortage of available housing stock, sales were strong and consents for new dwellings were also up, he said. Interest rates were also at record lows.

"Anyone who has paid attention to Terralink data over last four years has been grossly misled."

But Alexander agreed the forced sale of someone's home was traumatic and the record high figures were of concern. Foreclosures represented the most severe cases where property owners could not service their mortgages.

Mortgagee sales go through roof in Northland

Northland could be heading for a record year of mortgagee sales after a 155 per cent rise in forced sales in the region during the first quarter of 2012.

Northern Advocate,

9 June, 2012

Figures released by Terralink today show that nationally there were 524 mortgagee sales from January to March, with almost 10 per cent, 51, in Northland, the fourth-highest total in the country behind Auckland, Waikato and Bay of Plenty.

The Northland sales were 155 per cent up on the corresponding period last year and Terralink managing director Mike Donald said this year was shaping up to be the toughest for embattled property owners.

He said the quarter's figures were a record number of mortgagee sales for the period. The 524 mortgagee sales were 100 more than during the corresponding period last year, and more than the previous record of 519 in 2010 when New Zealand was at the height of economic recession.

He said Northland's percentage rise in mortgagee sales was the highest in the country. In 2008 there were 54 mortgagee sales for the whole year and a record high of 200.

"There have been quite a significant number of mortgagee sales in Northland, particularly in Whangarei and the Far North. In March there were 15 mortgagee sales in Whangarei alone," Mr Donald said.

He said there had been a big rise in the number of mortgagee sales for individuals considered to be property investors, who owned several properties. "That's those people who own five or more properties. The figures indicate this group is under significant pressure, a reflection, perhaps of reduced equity as property values flatten or decline, and increased pressure on cash flows," Mr Donald said. The numbers were a genuine cause for concern, and confirmed a trend that began late last year. "Numbers began to trend upward during the second half of last year, back to recession level highs. These new figures indicate we may be a long way off economic recovery. In fact, things have never been worse for property owners."

The figures also showed a marked upturn in the "big five" banks forcing mortgagee sales. In 2009 the proportion of sales involving tier-one lenders was 36 per cent. In the first quarter of this year, that had risen to 55 per cent. He said Terralink's figures flew in the face of claims the number of mortgagee sales was declining.

"Our data is based on legal registration of actual foreclosures, not on listing data where the term 'mortgagee sale' is often simply a marketing term. I challenge anyone to look at these figures and tell me things are getting better for Kiwi property owners," Mr Donald said.

Otago recorded a rise of 153 per cent of mortgagee sales, from 15 to 38. Wellington property owners also felt the pinch with 41 mortgagee sales, up 71 per cent from the corresponding period in 2011. Some regions, notably Hawke's Bay and Canterbury, experienced a modest decrease in mortgagee sales.

Mr Donald said while the overall picture remained bleak, the number of "mum and dad" property owners facing mortgagee sales appeared to be easing. "If there's a silver lining anywhere in the figures, it's the drop in the proportion of individuals with a single property facing mortgagee sales, from 26 per cent in the first quarter of 2011 to 21 per cent this year."