Mortgagee levels not as bad as reported: Helm

Terralink data released last week showed that in the first half of this year, there were 1129 mortgagee sales, up from 1007 for the same period last year.

Terralink managing director Mike Donald told media he expected the number to continue to rise and could reach or surpass 2009 levels.

But Helm said that was inaccurate and the number of active listings had fallen substantially since the peak of the financial crisis.

“There is no doubt as was reinforced by Helen O’Sullivan CEO of the Real Estate Institute, that part of the reason for sales remaining active whilst listings are falling is a function of the more active property market which is allowing banks to more confidently offload liability assets in the form of mortgagee properties. However I think the Terralink data and commentary should be examined more closely.”

He said that although the first quarter of this year was active for sales, the increase between the first two quarters bore no relation to the 2009 trend and looked more like 2011.

He said it was unfair to suggest that “mum and dad” investors were bearing the brunt of the mortgagee strife. “I would judge 25% of the 2012 Q2 data is a lot less than 39% of the same period in 2009.”

Helm said the sales were a result of people overleveraging. “They may unwittingly become the victim of external factors – all such circumstances contribute to the background fact that mortgagee sales are not exclusively the domain of a recession; they are part of modern life just as are bankruptcy and other outcomes of capitalism at work.”