Residential mortgage loans in negative equity September quarter 2005

The Hong Kong Monetary Authority announced today the results of its latest survey on residential mortgage loans (RMLs) in negative equity¹.

The number of RMLs in negative equity increased slightly by about 300 cases to some 9,000 cases² with an aggregate value of HK$16 billion in the three months to end-September. Despite the recent increase, the number of RMLs in negative equity has fallen by 91% compared with the peak of about 106,000 cases at end-June 2003.

The estimated unsecured portion of these negative equity RMLs remained unchanged at HK$2 billion. The overall loan-to-value ratio of these loans declined to 114%. The loan quality of the negative equity RMLs improved further, with the three-month delinquency ratio³ falling to 0.96% from 1.38% at end-June 2005. The weighted average interest rate of the outstanding negative equity RMLs was 0.86% below the best lending rate.

For further enquiries, please contact:

Hing-Fung Wong, Resource Co-ordinator, at 2878 1802 or
Kevin Ip, Manager (Press), at 2878 1687

Hong Kong Monetary Authority
7 November 2005

Annex (PDF file, 11KB)

1 The mortgage portfolio of the surveyed authorized institutions represents about 98% of the industry total. The survey results have been extrapolated to approximate the position of the banking sector as a whole.

2 The figures derived from the survey relate only to RMLs provided by authorized institutions on the basis of first mortgages and which the reporting institution knows to be in negative equity (i.e. the outstanding loan amount with the reporting institution exceeds the current market value of the mortgaged property). Not included in these figures are some RMLs associated with co-financing schemes which would be in negative equity if taking into account the second mortgage. The extent to which such RMLs are in negative equity is not known because authorized institutions do not maintain records on the outstanding balances of the second mortgages.

3 Negative equity RMLs delinquent for more than three months as a percentage of total negative equity RMLs.