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Residential mortgage loans in negative equity December quarter 2007 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 decreased by about 1,600 cases to about 1,900 cases2 with an aggregate value of HK$3 billion in the three months to end-December 2007. Compared with the peak of about 106,000 cases at end-June 2003, the number has fallen by 98%. The estimated unsecured portion of these loans was lowered to HK$0.4 billion. The loan-to-value ratio of the negative equity RMLs rose to 117% from 116% at end-September 2007. The three-month delinquency ratio3 of the negative equity RMLs rose to 1.75% from 1.57% at end-September 2007 owing to the contraction of the total portfolio of negative equity RMLs. For
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Hong Kong Monetary Authority
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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