HK mortgages in negativity equity soar 326%

Country:  Hong Kong

2 February 2009

The estimated volume of residential mortgage loans (RML) in negative equity in Hong Kong escalated by a staggering 326% in Q4 2008 to 10,949 cases as property prices fell, data from the Hong Kong Monetary Authority showed.

The collective value of RMLs in negative equity rose to HK$24.8bn (£2.24bn) at the end of December, up from HK$6bn (£544m) at the end of the Q3 2008, underlying the deep recession that the country now finds itself in.

The loan-to-value ratio of the RMLs in negative equity rose to 112% from 107% in late September.

Loans in negative equity mean the outstanding loan amount exceeds the current market value of the mortgaged property.

Negative equity cases hit a record 106,000 cases in June 2003, following the last Hong Kong property crash a decade ago. 

Property prices in Hong Kong are widely projected to record further declines in 21009 as the global economic downturn intensifies.