Fewer Bay homeowners lost their properties in mortgagee sales last year - despite soaring house prices - as near record-low interest rates make it easier for struggling property owners to afford repayments.
Figures released exclusively to NZME by data analysis company CoreLogic showed a 42 per cent decrease year-on-year in the Bay of Plenty, from 78 in 2014 to 45 last year.
Nationally, the figures showed a slight increase in forced sale numbers during the last quarter of 2015, but annual foreclosure numbers fell from 802 to 550 year-on-year.
Waikato recorded the most mortgagee sales (77 down from 145), followed by Auckland (75 down from 123), Manawatu-Wanganui (71 down from 102), Wellington (62 down from 78), Northland (47 down from 59), Bay of Plenty (45 down from 78), Canterbury (35 down from 42), Hawkes Bay (29 down from 38), Tasman/Nelson/Marlborough (24 up from 18), Otago (23 down from 26), Taranaki (21 up from 18), West Coast (20 down from 21), Southland (10 down from 34) and Gisborne (10 down from 20).
Distressed sales numbers have fallen dramatically since peaking in 2009 when 2620 properties were forcibly sold by banks during the global financial crisis. But the number of mortgagee sales is still higher now than a decade ago when 362 occurred during 2005.
Outgoing New Zealand Bankers Association chief Kirk Hope said cut-price mortgage rates were a key factor in the low number of dis-tressed sales, as people had greater ability to repay loans.
On Thursday, the Reserve Bank held the official cash rate at 2.5 per cent and signalled further cuts were likely as it wrestles with near-zero per cent inflation.
That's good news for homeowners but could further fuel Auckland house prices which hit an average value of more than $930,000 in December, according to Quotable Value, potentially forcing first-home buyers to take on higher levels of debt.
However, Mr Hope said banks did not lend to borrowers who could not comfortably afford repayments. This was not just based on current low interest rates, he said. Most banks used an additional 3 per cent "buffer" when assessing mortgage applications.
"For banks, it's the last thing they want to do is conduct a mortgagee sale and sell a customer's home."
Strong price growth in the Auckland market in recent years had helped prevent more forced sales because homeowners could usually sell their properties privately before the bank stepped in.
However, parts of provincial New Zealand could be put under increasing financial pressure if lower Fonterra payout forecasts hit the balance sheets of dairy farmers.
"If the payouts continue to be low for even another year, the thing to be watching is what's happening in those rural and provincial economies and the impact on businesses and mortgages," Mr Hope said.
CoreLogic senior research analyst Nick Goodall said favourable lending conditions during 2015 had translated to fewer mortgagee sales as lower interest rates mostly meant lower, more manageable repayments.
"However in some of the smaller centres where a lot of employment relies on one or two industries, any major change to the local economy can affect employment/income which may flow on to mortgagee sales."