One in three people viewing realestate.co.nz earlier this year searched the words "mortgagee sale", hunting a bargain ripe for plucking.

But behind the statistics is the heartache of homeowners such as Rose Taylor, whose Hamilton home will be sold by her lender, Sovereign, on Friday.

Taylor bought her home two years ago, when her 28-year marriage ended. But she began suffering depression, an illness that affects one in every six New Zealanders, and lost her job.

"I was happy in my job, but things just went down when our marriage broke up.

"Through my depression and stress I ended up losing my job of six years."

Taylor was forced to go on the sickness benefit, and despite trying to to raise more money by taking in boarders, could not keep up the mortgage payments.

When her home is sold, Taylor will still face years of repayments, not only the mortgage arrears, but for the inevitable shortfall on the sale.

Although she paid $320,000 when she bought the house with a $300,000 mortgage two years ago, the property slump has bitten around $45,000 off its value, leaving it worth less than $275,000.

And six months' worth of monthly $2000 mortgage payments have accrued since Taylor became unable to work. She says to end up owing so much is "the hardest part, after close to 25 years of owning homes".

She is looking for another job, but "there's not too much out there, and I still have my bad days, so will have to start part-time".

Lynn Eagar of Ray White in Hamilton says at least 20 per cent of mortgagee sales could be avoided if the homeowner addressed the problem early, but sadly many don't know they should talk about it.

Darryl Evans, chief executive of Mangere Budgeting Service, says asking a budget adviser to help can give the homeowner more options.

The good news is mortgagee sales are set to decline. Sales numbers lag listings numbers by up to three to four months, and Alistair Helm, chief executive of realestate.co.nz, says listings are dropping as Christmas approaches.

"At the height of April, May and June we were seeing about 450 mortgagee-sale listings on the website at any one time. That's come down to around 300 now and will rise to about 330 after Christmas."

Recent weeks have seen a significant fall, which Helm expects to drop further from the current level of 322 down to 250.

"This is a seasonal effect of fewer new listings being posted. Banks do not list over Christmas as activity dries up."

The number of website visitors searching for the key word "mortgagee" has also been falling over the past eight months, now accounting for about 600 a week, or 7 per cent of all searches. Searches for mortgagee sale listings on the site peaked at more than 3500 a week, or around 30 per cent of all searches, late last year and early this year.

Helm says mortgagee sales generated most interest when property sales slumped to a low of 4000 a month. "The only people prepared to be buyers in that market were adamant they were going to get bargains. In theory, mortgagee sales are bargains because they are desperate sales."

Now, he thinks, buyers realise mortgagee sales are not always a bargain. "As long as they're not trashed, they tend to be treated as a property for sale at auction.

"There's a bit of motivation in that the sale is going to be closed because the bank wants to get rid of it, but it doesn't mean it's going to be chucked out at bargain-basement price."

Terralink's latest data shows mortgagee sales in September passed the high of 321 in July this year to hit 343, making the total for the first nine months of the year 2167, compared to 790 for the same period last year.

The September sales represented a 130 per cent increase over September last year, when mortgagee sales were already rising.

Helm says Terralink's mortgagee sales data is anomalous because it counts all mortgagee sales, including bare land, businesses, commercial property and unfinished developments.

"It's something I think is misleading," Helm says.

The number of sales could be rising because sales of developments and sections may be growing proportionally, he says. In Auckland, mortgagee listings have dropped to 130 since their February peak of 225, but have picked up in the provinces.

The real pain is in rural and coastal areas, as finance company receivers force section fire sales more aggressively.

Like listings, sales have shifted from being predominantly in major centres to provincial New Zealand. Around a third of nationwide sales in September were in Auckland, compared to 44 per cent just over a year ago.

The regions with the largest increase were Northland, from three sales in September last year to 33 in September this year, and Hawke's Bay, from three in September last year to 24 in September this year.

Get help

IF YOU are struggling to pay your mortgage, contact a reputable budgeting service.

There are more than 200 free budget advisory services around the country and a free budget phone line: 0508 BUDGET LINE (0508 283 438).