Fewer in Bay hit by mortgagee sales

Luke Turner says the drop in mortgagee sales is a result of house prices, confidence and interest rates.

Substantially fewer Bay of Plenty residents are losing their properties and homes to mortgagee sales.

CoreLogic figures show there were 77 mortgagee sales in the Bay of Plenty in 2014 - down from 116 in 2013 and noticeably fewer than in previous years.

Mortgagee sales have steadily declined since 2011, when there were 178 forced sales.

Such sales occur when mortgage repayments are not made and the lending bank or institution exercises the right to sell the house or property .

Director of Majesty Mortgage Brokers in Tauranga, Luke Turner, said the drop was due to house prices, confidence and interest rates.

"Cheaper interest rates and lower repayment rates have helped to reduce the number of mortgagee sales," Mr Turner said.

"There is also more security and more confidence in the market. There are actually less mortgagees now and another thing is that people's house prices have been increasing in the past few years so people can now probably sell their houses and repay mortgages if need be and also make a bit of profit.

"The housing market has definitely improved, a lot of which has been driven by Auckland."

Mr Turner said fewer people had been permitted to take out mortgages which they would struggle to pay back.

"If you go back to 2007, you could get 100 per cent mortgages and maybe the people who were picking those up were higher-risk clients who were more likely to go into mortgagee sale.

"There are a number of other factors as well, like redundancies, which were coming around 2007 and 2008 and there were a lot of people who would have been unable to service their mortgage any longer," he said.

Nationally, there were 198 mortgagee sales in the last three months of 2014. That was down from 243 in the previous quarter, meaning fewer homeowners were being forced to sell.

Economist Shamubeel Eaqub said the drop was the result of an economic upturn after the protracted global financial crisis.

"The general story on mortgagee sales is very positive," Mr Eaqub said. "The figures showed a huge departure from the pits of the recession, when at one point in 2009 mortgagee sales accounted for one in 25 of all homes sold."

Now, only 1 per cent were mortgagee sales.

"There are more jobs and wages have increased, albeit gradually. Mortgage stress has reduced considerably."

Some regional variation was seen. In Northland and the Bay of Plenty, there were more mortgagee sales in the last few months of the year.

"This is consistent with the broader economic picture," Mr Eaqub said. "The recovery from recession has been lopsided. Nearly 80 per cent of new jobs in the last seven years have been in Auckland and nearly 20 per cent in Canterbury ... "