Hong Kong’s end-June ‘negative equity’ home loans steady, but could rise if slump persists

Name: Beauty in plain sight: why Hong Kong's public housing estates are worth a closer look
Uploaded: 2024-07-31T11:39:29.000Z
Duration: 3 min 28 s
Description: Beauty in plain sight: why Hong Kong's public housing estates are worth a closer look

The number of mortgage holders with negative equity fell 5.5 per cent to 30,288 at the end of June, from 32,073 at the end of March, according to HKMA data

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General view of homes in Kai Tak. Lived-in home prices in Hong Kong have fallen to the lowest in almost eight years. Photo: Dickson Lee

Salina Li

Published: 7:39pm, 31 Jul 2024Updated: 3:53pm, 1 Aug 2024

Hong Kong’s falling home prices have had a limited impact on mortgage borrowers, but the situation could drag more homeowners into negative equity if the downtrend persists, according to mortgage broker mReferral.

The number of so-called upside-down loans fell 5.5 per cent to 30,288 at the end of June, from 32,073 at the end of March, according to data released by the Hong Kong Monetary Authority (HKMA) on Wednesday. These cases were mainly related to bank staff housing loans or loans under the mortgage insurance programme, which generally have a higher loan-to-value ratio, the HKMA said.

The number could rise above 36,000 later this year if lived-in home prices drop by another 5 per cent, said Eric Tso Tak-ming, chief vice-president of mReferral.

“Negative-equity cases dropped slightly in the second quarter, which is believed to be a reflection of the market situation after the government’s withdrawal of all property curbs,” he added, pointing to the rise in property prices in March, April and May.

The first-quarter numbers had risen threefold from the prior quarter, and were the highest since some 40,000 cases were recorded in the first quarter of 2004 following the severe acute respiratory syndrome (Sars) epidemic, according to mReferral.

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Beauty in plain sight: why Hong Kong's public housing estates are worth a closer look

The aggregate value of negative-equity loans decreased to HK$155 billion (US$19.8 billion) in the three months to June, versus HK$165.3 billion at the end of March.