Fears mortgagee sale floodgates could open as jobless Kiwis start selling homes

House sales are still up but Kiwis who've lost their jobs and can no longer afford their mortgage are starting to sell their homes.

The six-month holiday on mortgage repayments ends next month and there are growing concerns that could open the floodgates for mortgagee sales.

From a pilot captain for Virgin to a casual council groundsman - COVID-19 has changed Brendan's life in a way he never imagined.

"My wife and I have both lost our jobs with the COVID situation, so it's going to take us a while to get incomes that would be able to cover the mortgage," he says.

Not only has COVID-19 cost them their jobs, it's now taking their home.

"We thought it would be prudent to look at selling the house," he says.

They took the six-month mortgage holiday when it was announced in March but it expires next month.

Reality is about to hit hard for many. More than 139,000 borrowers have deferred some or all of their loan repayments. That's $44.2 billion worth of loans, including mortgages.

The Reserve Bank is considering extending the mortgage holiday, with a decision due in a couple of weeks.

"I know others who are in situations where they've got very large mortgages, but they're just holding out at the moment," Brendan says.

The likelihood of more fire sales is cause for concern. More people being forced to sell up, no matter the price, could be the pin that pops our property market bubble.

The Reserve Bank is all too aware of the danger. A spokesman told Newshub "rapid, below market property sales" can "exacerbate economic risks".

The head of the country's biggest bank is concerned.

"Two things that cause problems with home loans are either people lose their jobs or interest rates go up significantly," ANZ CEO Antonia Watson says.

"The latter isn't likely to happen any time soon, I don't think, but the first one is clearly a concern and will impact some people."

In a survey of its home loan customers over the past three weeks, ANZ found that:

  • 75 percent can start repaying their mortgage
  • 17 percent don't know
  • 8 percent are at risk of default

Watson is adamant the bank won't immediately start repossessing homes.

"That's a last resort," she says.

But how long until forgiveness becomes foreclosure?