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Residential mortgage loans in negative equity March quarter

The Hong Kong Monetary Authority announced today the results of the latest survey on residential mortgage loans (RMLs) in negative equity. The mortgage portfolio of the surveyed authorized institutions represents about 98% of the industry total.

Extrapolating the survey results to approximate the position of the banking sector as a whole, the number of RMLs in negative equity increased to about 83,0001 with a value of HK$135 billion, reflecting the further decline in property prices over the quarter. The unsecured portion of these loans is estimated at about HK$29 billion, or 5.4% of the total residential mortgage lending of the banking sector.

The three-month delinquency ratio of RMLs in negative equity remained higher than that of the overall mortgage portfolio (1.11%). However, it improved to 2.56% at end-March from 2.62% at end-December.

The average interest rate being charged to negative equity homeowners was 0.88% below the best lending rate (BLR) at end-March, compared with 0.83% below BLR at end-2002, reflecting authorized institutions' efforts to help negative equity homeowners by lowering interest rates.

More detail is given in the Annex.

For further enquiries, please contact:

Jasmin Fung, Manager (Press), at 2878 8246 or
Thomas Chan, Senior Manager (Press), at 2878 1480

Hong Kong Monetary Authority
9 May 2003

 

1 The figures derived from the survey relate only to RMLs provided by the banks on the basis of first mortgages and which the banks know to be in negative equity. Not included in these figures are some 62,000 RMLs associated with government-funded co-financing schemes and another about 24,000 RMLs associated with private sector co-financing schemes. The extent to which such RMLs are in negative equity, taking into account the second mortgage, is not known because banks do not maintain records on the outstanding balances of the second mortgages.

Last revision date: 1 August 2011
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