Mortgage Stress On The Rise

The information in this article is courtesy of Business Report (Mortgage stress set to increase – 20 May 2009)

Alliance Group Auctioneers believes that properties that are two months behind with their payments is set to increase in the second quarter of the year.

The Distressed Asset Index, which is due to be released by Alliance Group at the end of June, indicates that mortgage stress (2 months behind on mortgage payments) will increase from 125 000 home owners to 200 000 home owners in the second quarter. The index also shows that severe mortgage stress (4 months behind on payments) will shoot up from 55 000 to 85 000.

According to Rael Levitt, CEO of Alliance Group, the market is expecting “jumbo mortgage distress” in luxury as well as developments and golf estates. He added that there is also some distress in the commercial property market.

Another shocking find by the Distressed Asset Index is that 80% of bondholders who were in severe distress would in all likelihood have to sell their homes. This led to a new programme by Alliance Group where real estate agents could earn commission by bringing buyers to auctions.

Levitt said: “Real estate agents and auctioneers will combine forces to assist struggling home owners to sell their properties successfully.”

Adding to this, Levitt said that the Broker Participation Programme would allow all brokers and estate agents to introduce buyers to properties that were being bought to the auction floor through various residential property recovery programmes.