Enforced sales down sharply in Bay

Nationally, there were 198 mortgagee sales in the last three months of 2014 nationwide. Photo / File

Substantially fewer Hawke's Bay residents are losing their properties and homes to mortgagee sales.

Statistics released by CoreLogic showed there were 36 mortgagee sales in Hawke's Bay in 2014 - a drop from the 54 in 2013 and noticeably fewer than in previous years.

There has been a steady decline in mortgagee sales since 2011 when there were 67 forced sales.

A mortgagee sale occurs when mortgage repayments aren't made and the lending bank or institution exercises the right to sell the house or property.

Owner of Mike Pero in Hawke's Bay Paul McCarthy said the decrease in mortgagee sales was due to fewer people getting mortgages and a change of focus by banks and lending institutions.

"People were struggling to buy homes, the market wasn't busy and the banks concentration was to manage the existing portfolios rather than go out to the market and spend a whole lot of money, or lend a whole lot of money out to people who can't afford to pay back the borrowed amount," he said.

Mr McCarthy said the banks would usually work with people who were struggling to service mortgages and a mortgagee sale was the last resort.

"My understanding is that they had done up their services very well to the degree where they would work with people who were in financial trouble until such time they could get back on their feet.

"That was my impression of what was happening out there," he said. "The eventuality that a house does go to mortgagee sale is simply, from my understanding, due to a breakdown in communication between a customer and a bank.

"A mortgagee sale happens when a customer or home owner refuses to talk to the bank and they walk away from the situation, they walk away from the obligation and the communication falls down badly."

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

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

"The general story on mortgagee sales is very positive," he 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, Mr Eaqub said, only 1 per cent of houses sold were mortgagee sales.

There was some regional variation. 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, with little growth in other parts."