Hong Kong negative equity mortgage cases hit 13-quarter low

The Hong Kong Monetary Authority reported that the number of negative equity residential mortgage loans fell to 3,819 at the end of the third quarter. This represents a 12.3% decrease from the 4,356 cases recorded at the end of the second quarter, marking a 13-quarter low. The total loan amount involved also declined by approximately 11.7%, falling from HK$19.6 billion to HK$173 billion, which is a 16-quarter low.

Despite the drop in total cases, the ratio of negative equity mortgage loans in arrears for more than three months rose from 1.25% in the second quarter to 1.34% in the third quarter. This increase occurred because the decline in the total loan amount was greater than the decline in the amount in arrears.

The Monetary Authority noted that these cases primarily involve loans with high mortgage financing ratios, such as those held by bank employees or those under mortgage insurance schemes. Industry experts suggest that while property prices saw a brief period of consolidation, the overall repayment capability of homeowners remains stable, and the number of cases may continue to decline if property prices remain steady.