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Increase in mortgagee sales
By GREG NINNESS - Sunday Star Times | Sunday, 02 December 2007
Mortgagee sales have increased sharply as owner-occupiers and investors get caught between high debt levels and rising interest rates.
The trend could potentially create problems for some banks and finance companies, although any losses from recent forced sales are unlikely to be showing up in their published figures yet.
Most major real estate websites are advertising much higher numbers of mortgagee sales than in the past and mortgagee auctions are becoming increasingly common.
Last week Auckland's largest real estate company, Barfoot & Thompson, had 49 mortgagee sales listed on its website, about double the number of a few months ago. They ranged from an inner city apartment to a multimillion-dollar waterfront mansion. And TradeMe Property had 29 mortgagee sales on its website last week, up from 12 at this time last year.
Lynn Eagar, one of a handful of real estate agents in the industry who specialises in mortgagee sales, said he had received instructions to handle 80 mortgagee sales so far this year, compared with 15 for the whole of last year.
Eagar is an agent with Ray White Hamilton, but handles mortgagee sales from Taupo in the south, to Pukekohe on the outskirts of Auckland.
He said he first noticed the pick-up in business in April when contacts in the legal profession told him they were processing far more property law notices than usual, a precursor to a mortgagee sale. Since then his phone hasn't stopped ringing as new assignments roll in.
Eagar said the most common reason for a mortgagee sale was that the home owner had borrowed money to buy a car or other major purchase and secured the loan against the house, on top of an existing mortgage.
When they got behind in their repayments they found the car wasn't worth anywhere near what they'd paid and the finance company forced a sale of the property. But he had also noticed that even the mainstream banks were being far less lenient than they used to be with people in arrears on their mortgage payments.
And while many people who faced a mortgagee sale were "not commercially savvy", even experienced investors were now getting caught out, Eagar said. One of the properties he had just listed was an almost completed, small residential development in Otorohanga that had been undertaken by people "well experienced in real estate matters", he said. They had moved five ex-state houses they had purchased on to a 1ha site with the intention of subdividing it.
Most of the refurbishment work on the homes had been done but the bank had pulled the plug before the project was completed and put the whole lot up for mortgagee sale.
In the current market, though, putting a property up for mortgagee auction is no guarantee of a quick sale. Last Wednesday the Sunday Star-Times attended two mortgagee auctions and, of the three properties offered, only one sold.
By GREG NINNESS - Sunday Star Times | Sunday, 02 December 2007
Mortgagee sales have increased sharply as owner-occupiers and investors get caught between high debt levels and rising interest rates.
The trend could potentially create problems for some banks and finance companies, although any losses from recent forced sales are unlikely to be showing up in their published figures yet.
Most major real estate websites are advertising much higher numbers of mortgagee sales than in the past and mortgagee auctions are becoming increasingly common.
Last week Auckland's largest real estate company, Barfoot & Thompson, had 49 mortgagee sales listed on its website, about double the number of a few months ago. They ranged from an inner city apartment to a multimillion-dollar waterfront mansion. And TradeMe Property had 29 mortgagee sales on its website last week, up from 12 at this time last year.
Lynn Eagar, one of a handful of real estate agents in the industry who specialises in mortgagee sales, said he had received instructions to handle 80 mortgagee sales so far this year, compared with 15 for the whole of last year.
Eagar is an agent with Ray White Hamilton, but handles mortgagee sales from Taupo in the south, to Pukekohe on the outskirts of Auckland.
He said he first noticed the pick-up in business in April when contacts in the legal profession told him they were processing far more property law notices than usual, a precursor to a mortgagee sale. Since then his phone hasn't stopped ringing as new assignments roll in.
Eagar said the most common reason for a mortgagee sale was that the home owner had borrowed money to buy a car or other major purchase and secured the loan against the house, on top of an existing mortgage.
When they got behind in their repayments they found the car wasn't worth anywhere near what they'd paid and the finance company forced a sale of the property. But he had also noticed that even the mainstream banks were being far less lenient than they used to be with people in arrears on their mortgage payments.
And while many people who faced a mortgagee sale were "not commercially savvy", even experienced investors were now getting caught out, Eagar said. One of the properties he had just listed was an almost completed, small residential development in Otorohanga that had been undertaken by people "well experienced in real estate matters", he said. They had moved five ex-state houses they had purchased on to a 1ha site with the intention of subdividing it.
Most of the refurbishment work on the homes had been done but the bank had pulled the plug before the project was completed and put the whole lot up for mortgagee sale.
In the current market, though, putting a property up for mortgagee auction is no guarantee of a quick sale. Last Wednesday the Sunday Star-Times attended two mortgagee auctions and, of the three properties offered, only one sold.
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