Mortgagee sales to jump 20% as interest rates rise, analysts warn

Mortgagee listings hit a record high this year.

Expect more mortgagee properties to flood auctions in coming months. Analysts reckon that rising interest rates and the persistently sluggish local economy will spur activity in the auction market, as more sellers moderate their price expectations.

A report from Knight Frank noted that the number of mortgagee listings hit a five-year high in 2016, with 243 properties put up for sale. Almost half or 41.2% of total auction transaction value was also derived from mortgagee sales.

"With the US Federal Reserve having lifted interest rates by a quarter point and projecting three rate increases in the year ahead, mortgagee sales transactions may continue to rise on the back of increased mortgagee listings and moderated price expectations," Knight Frank noted.

Meanwhile, Mok Sze Sze, Head of Auctions at JLL Singapore noted that mortgagee sales are expected to increase materially next year as both buyers and sellers come to terms with the cooling measures.

"We expect mortgagee sales to increase by 10 to 20 per cent in 2017, considering that Singapore is going through a protracted cyclical downturn, and the economy is expected to stay sluggish next year,” Mok noted.