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Residential mortgage loans in negative equity December 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 has declined by more than 80% from the peak of about 106,000 cases at end-June 2003 to some 19,200 cases2 with an aggregate value of HK$33 billion. Compared with end-September 2004, the number has fallen by 24%.

The estimated unsecured portion of these negative equity RMLs fell to HK$5 billion from HK$7 billion at end-September 2004. Correspondingly, the overall loan-to-value ratio of these loans moved down to 119%. The quality of the negative equity RMLs improved, with the three-month delinquency ratio3 falling to 1.58%, from 1.63% at end-September 2004. The weighted average interest rate of the outstanding negative equity RMLs was 0.71% below the best lending rate (BLR), compared with BLR-0.74% at end-September 2004.

For details, please refer to the Annex.

For further enquiries, please contact:

Kevin Ip, Manager (Press), at 2878 1687 or
Thomas Chan, Senior Manager (Press), at 2878 1480

Hong Kong Monetary Authority
17 February 2005

 

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.

Last revision date: 1 August 2011
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