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Residential mortgage loans in negative equity: End of March 2023

The Hong Kong Monetary Authority announced today (28 April) the results of its survey on residential mortgage loans (RMLs) in negative equity at end-March 2023.

The estimated number of RMLs in negative equity decreased to 6,379 cases at end-March 2023 from 12,164 cases at end-December 2022. These cases were related to bank staff housing loans or RMLs under mortgage insurance programme, which generally have a higher loan-to-value ratio.

The aggregate value of RMLs in negative equity decreased to HK$34.4 billion at end-March 2023 compared with HK$66.3 billion at end-December 2022.

The unsecured portion of these loans decreased to HK$0.7 billion at end-March 2023 from HK$2.5 billion at end-December 2022.

The three-month delinquency ratio of RMLs in negative equity was 0.04% at end-March 2023.

It is important to note that the figures derived from this 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 RMLs associated with co-financing schemes which would be in negative equity if the second mortgages were taken into account. 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. 

The mortgage portfolios of the surveyed authorized institutions represent about 99% of the industry total. The survey results have been extrapolated to estimate the position of the banking sector as a whole. 

Source:The Hong Kong Monetary Authority (2023.4.28)

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