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Nerida Conisbee: Why mortgagee sales are rising

Cost of living pressures and mortgage stress has seen the number of mortgagee sales increase, according to new data.

Research from Ray White found the number of mortgagee sales across Australia has steadily increased since January, but is still below the peak during pandemic lockdowns.

Mortgagee sales have risen from a low of 109 in March 2022, to 174 in August.

Ray White Group Chief Economist, Nerida Conisbee said mortgagee sales were currently trending upwards.

“Right now, we have seen a pick up in mortgagee sales however at this point they remain below what we have seen through the pandemic,” Ms Conisbee said.

“It also highlights how important the support of banks is when it comes to helping people through mortgage stress.”

Ray White compiled the data using historical listings on Domain and realestate.com.au that included terms such as ‘mortgagee’.

Ms Conisbee said the biggest increase in mortgagee sales occurred in 2021 when they reached 285 across the country during the height of Sydney and Melbourne lockdowns.

“From March 2020, there was a gradual increase in the number of mortgagee sales, driven by Australia going into recession during this time,” she said.

“The number of mortgagee sales however didn’t increase as much as they could have during this time given that banks offered six-month mortgage payment freezes from the end of March 2020.

“By the end of 2020 and early 2021, the number began to fall as property market conditions improved and it became apparent that the short recession was over. 

“Not surprisingly, the biggest increase we saw over this time period was when mortgage payment freezes came to an end in March 2021.”

Ms Conisbee said mortgagee sales could have been far higher over the past few years had the banks not instituted mortgage holidays.

“Despite a red hot property market, and an economy that was getting back to normal, the number was elevated because borrowers who were in mortgage stress were helped through by the freeze on payments,” she said.

There are a number of things that will help borrowers through this period of increasing interest rates, Ms Coinsbee said.

“The first is that unemployment is very low, the second is that banks are well capitalised and the third is that savings rates hit record highs during the pandemic,” she said.

“Finally, the peak of interest rates may be coming sooner rather than later. 

“Bond markets are pricing in Australian interest rates peaking at three per cent early next year, down from 4.5 per cent tipped less than two months ago. 

“Supply chains are now unblocking and fuel prices are coming back. 

“These interest rate rises and the challenges it creates for household balance sheets may be over sooner than we think.”

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.