Residential mortgage loans in negative equity June quarter 2004

Press Releases

03 Aug 2004

Residential mortgage loans in negative equity June quarter 2004

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 reduced by almost 30% over the three-month period to end-June to about 28,200 cases with an aggregate value of HK$48 billion2. The unsecured portion of these loans is estimated to be about HK$8 billion, down from HK$36 billion a year previously. With increased collateral values and continued reductions in outstanding balances due to loan repayments, the overall loan-to-value ratio on negative equity loans declined to 121% from 125% at end-March. Reflecting the higher associated risks of loans in negative equity, the weighted average interest rate was 0.65% below the best lending rate (BLR), compared with 0.74% below BLR at end-March. Consistent with the improving economic conditions, the three-month delinquency ratio of negative equity RMLs3 fell to 1.97% from 2.19% at end-March.

For details, please refer to 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
3 August 2004

 

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.

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Last revision date : 03 August 2004