Fewer forced to sell homes in Bay

DROPPING: Lower interest rates are responsible for fewer mortgagee sales in the Bay of Plenty, mortgage broker Chris Rapson of Rapson Loans and Finance says.PHOTO/GEORGE NOVAK

Fewer Bay of Plenty residents are losing their properties and homes in mortgagee sales.

CoreLogic figures show there have been 62 mortgagee sales in the year to June 2015, compared to 90 for the corresponding period the year before.

The Bay of Plenty was one of nine New Zealand regions to experience a reduction in forced sales.

Tauranga mortgage broker Chris Rapson said he believed lower interest rates played a major role in the fall in forced house sales.

"Now the interest rates have come back, that's had positive benefits on people and their budgets. It's more affordable," he said.

Current interest rates were down to about 4.69 per cent, he said.

Mr Rapson said that, overall, the figures for the Bay of Plenty were positive. The figure of 62 mortgagee sales appeared to be a "very small percentage" compared with the regionwide population of homeowners, which he roughly estimated to be about 80,000.

Mr Rapson said mortgagee sales were heartbreaking events that destroyed wealth and had a far-reaching impact on the local economy.

Mortgagee sales tended to sell for about 20-30 per cent less than the property's value, he said. "It's a good thing there are a lot fewer of them because of the impact on families and the community."

Nationally nearly 700 homeowners lost their properties and five regions recorded a jump in mortgagee sales - Hawke's Bay (47), Otago (31), Southland (27), Tasman-Nelson-Marlborough (22), and West Coast (16).

Waikato had the most (117), followed by Manawatu-Wanganui (90), Auckland (84), and Wellington (76).

But Harcourts agent and mortgagee specialist David Savery warned he expected the number of distressed sales to increase in farming-reliant economic regions as conditions tightened.

He cited lower payouts to dairy farmers, who have just had their forecast payout slashed by Fonterra to $3.85 per kilo of milk solids, sucking $3.3billion from suppliers and leaving the average dairy farmer facing a $250,000 loss this season.

Higher fuel prices, limited wage growth and muted provincial property markets were also factors.

Economist Shamubeel Eaqub agreed more provincial foreclosures were likely but he did not expect a dramatic increase.

"What we instead tend to see is lots of people really knuckling down and making do with what they've got, and that sort of perpetuates the slowdown in the economy because people aren't out there spending. They're trying to pay off their mortgages." - Additional reporting NZ Herald