Residential mortgage loans in negative equity June quarter 2005

Press Releases

05 Aug 2005

Residential mortgage loans in negative equity June 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 declined by 38% from the position of end-March 2005 to some 8,700 cases2 with an aggregate value of HK$15 billion at end-June. Compared with the peak of about 106,000 cases at end-June 2003, the number has fallen by 92%.

The estimated unsecured portion of these negative equity RMLs declined to HK$2 billion from HK$4 billion at end-March 2005. Correspondingly, the overall loan-to-value ratio of these loans declined to 115%. The quality of the negative equity RMLs improved further, with the three-month delinquency ratio3 falling to 1.38% from 1.51% at end-March 2005. The weighted average interest rate of the outstanding negative equity RMLs was 0.66% below the best lending rate.

For further enquiries, please contact:

Jasmin Fung, Manager (Press), at 2878 8246 or
Hing-Fung Wong, Resource Co-ordinator, at 2878 1802

Hong Kong Monetary Authority
5 August 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.

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Last revision date : 05 August 2005