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Residential mortgage loans in negative equity September quarter 2011

The following is issued on behalf of the Hong Kong Monetary Authority:

     The Hong Kong Monetary Authority announced today (October 28) the results of its latest survey on residential mortgage loans (RMLs) in negative equity*.

     The estimated number of RMLs in negative equity increased to 1,653 cases** at end-September 2011 from 48 cases at end-June 2011.  The vast majority of the negative equity cases were related to mortgage loans with loan-to-value ratio at 90% or above, including staff housing loans and RMLs under mortgage insurance programme.

     The aggregate value of RMLs in negative equity rose to HK$4,148 million at end-September 2011 compared with HK$58 million at end-June 2011, representing 0.5% of total amount of outstanding mortgage loans at end-September 2011.

     The unsecured portion of these loans increased to around HK$165 million at end-September 2011 from HK$18 million at end-June 2011.

     Since the first quarter of 2011, there have been no RMLs in negative equity with delinquencies of more than three months.

* The mortgage portfolio of the surveyed authorised 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.

** The figures derived from the survey relate only to RMLs provided by authorised 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 the second mortgages were taken into account.  The extent to which such RMLs are in negative equity is not known because authorised institutions do not maintain records on the outstanding balances of the second mortgages.

Ends/Friday, October 28, 2011
Issued at HKT 16:51


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