Number of mortgages in negative equity at highest since 2003

The number of residential mortgages in negative equity – where the loan is bigger than the value of the home – was at the highest last quarter since 2003, as home prices continued to slide amid high interest rates, according to the latest survey by the Hong Kong Monetary Authority.

The estimated number of 40,741 cases as of the end March was 6.1 percent higher than the figure for December. They accounted for nearly 6.88 percent of the total number of mortgage borrowers.

The aggregate value of these loans also increased by 5.5 percent to HK$205.9 billion, though it was still below the number seen in September last year. 

The negative-equity loans accounted for nearly 11 percent of the total value of outstanding mortgage loans as of the end of March with the unsecured portion of debts rising to HK$16.4 billion, from HK$14.5 billion at the end of December 2024.

These cases were mainly related to bank staff housing loans or residential loans under mortgage insurance programs, which generally have a higher loan-to-value ratio, the HKMA said in a statement on Wednesday. 

The three-month delinquency ratio of mortgages in negative equity remained at a low level of 0.17 percent end-March, though the figure was up by 0.02 percentage points from December, the de facto central bank said. The overall mortgage delinquency ratio stood at 0.13 percent.

In a separate statement, the HKMA revealed that mortgage loans approved in March decreased by 5.3 percent from February to HK$24.7 billion. 

STAFF REPORTER