Mortgagee sales can be avoided - First National
October 23, 2008
Mortgagee sales can be avoided, says First National
Mortgagee sales can be avoided if home owners will keep in communication with their lender, says First National Real Estate.
First National General Manager John Stewart said while news of potentially 130,000 New Zealand homeowners in negative equity situations was scary, it did not have to result in a flood of mortgagee sales.
of those who are homeowners will be in it for the long
haul. For those who realize things are getting tight, the
main thing is to talk to their lender as soon as
“If you go to your lender or bank early enough, discuss your situation and possible need to restructure finance you can often avoid having to sell in this market and ride it out until a better market comes along, selling if you want to as opposed to having no other option.
“When you don’t listen to the market or do anything about your financial situation, you can end up in a mortgagee situation. As buyers know, mortgagee sales don’t result in good prices.
“One recent mortgagee sale First National was involved with sold for the lowest price in five years for that type of property in that town ($145,000). It was largely because the owner was not talking to his bank. He completely ignored the problem until the bank’s only option was to call us in to auction it off. We had trouble even getting entry to the house to show potential buyers around, again lowering his options.
“If he had have faced the issue and gone early enough to his bank, he may not have ended up mortgagee at all.”
Mr Stewart welcomed today’s interest rate cut and the confidence it would engender.
“The pending election and hopefully settling down of the overseas stock market will all add to a modicum of some stability in the market.”
Interest rates cuts were a signal for those considering buying that it was a better time to buy or upgrade, where they would get more for their money.
In the smaller and provincial centres it seemed people were more comfortable and confident than in the country’s big cities, reflected by more real estate activity there.
“It would seem to me that the people there are not being pushed around as much by what they hear on the world scene. Perhaps more homeowners there have a greater degree of equity than people in the bigger centres.”
While banks were tightening credit criteria, that did not mean no room to move, Mr Stewart said.
“Tightening credit is a responsible thing to do. Easy credit is what got us in this situation in the first place.
“Luckily, a big proportion of New Zealanders are
mortgage free and this has an insulating effect on the whole