Hong Kong’s third-quarter negative-equity cases jump 34% to a 21-year high of 40,713

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The jump in cases is ‘no cause for concern’ as the repayment ability of Hong Kong owners remains stable, a local mortgage broker says

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Flats of the Harmony Place project by Hong Kong Housing Society at Tone King Building in Cheung Sha Wan on 14 November 2013. Photo: SCMP

Salina Li

Published: 5:29pm, 31 Oct 2024Updated: 6:55pm, 31 Oct 2024

Hong Kong’s mortgage borrowers find themselves in increasingly dire straits, as the worth of their property is falling faster than the value of their loans, according to the latest data released by the city’s monetary authority.

The number of negative-equity cases soared to 40,713 at the end of September, a jump of 34 per cent from 30,288 cases at end-June, according to the Hong Kong Monetary Authority (HKMA). It was the highest number of cases in 21 years, since the fourth quarter of 2003, when cases hit 67,575.

The third-quarter surge is mainly related to bank staff housing loans or residential loans under the mortgage insurance programme, which generally have a higher loan-to-value ratio, the HKMA said.

The aggregate value of residential mortgage loans in negative equity increased to HK$207.5 billion at end-September, compared with HK$155 billion in the previous quarter.

The jump is due to a nearly 30 per cent decline in home prices from their peak in 2021, which “fell through both the 10 per cent and 20 per cent threshold”, said Ivy Wong Mei-fung, managing director of Centaline Mortgage Broker. “As a result, some high loan-to-value ratio mortgages of up to 90 per cent in recent years have also dropped into negative equity.”

Hong Kong’s lived-in home prices fell by about 1.7 per cent in September to their lowest level since August 2016, as the impact of interest-rate cuts has yet to filter through to the faltering property sector.