Residential mortgage loans in negative equity September quarter 2004

Press Releases

01 Nov 2004

Residential mortgage loans in negative equity September 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 10% in the three months to end-September to some 25,400 cases2 with an aggregate value of HK$43 billion. The overall loan-to-value ratio of these loans was 121%. Owing largely to increases in collateral values together with continued loan repayments, the estimated unsecured portion of the negative equity RMLs declined to about HK$7 billion from HK$8 billion at end-June. The weighted average interest rate of the outstanding negative equity RMLs moved down from 0.65% below the best lending rate (BLR) at end-June to BLR-0.74%. In line with the improving economic conditions, the three-month delinquency ratio of negative equity RMLs3 fell to 1.63% from 1.97% at end-June.

Year-on-year (i.e. comparing end-September 2004 with end-September 2003), the number of RMLs in negative equity has fallen by some 75%.

For details, please refer to the Annex.

For further enquiries, please contact:

Jasmin Fung, Manager (Press), at 2878 8246 or
Kevin Ip, Manager (Press), at 2878 1687

Hong Kong Monetary Authority
1 November 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 : 01 November 2004