Hong Kong's negative equity mortgage cases surge in Q3

HONG KONG : Cases of negative equity in Hong Kong's residential mortgage loans registered a near ninefold increase in the third quarter from the previous one, the city’s de facto central bank said, with a fall in house prices accelerating during the period.

The Hong Kong Monetary Authority said in a statement on Monday its survey estimated 533 cases of negative equity at the end of September, involving HK$3 billion ($382 million), compared to 55 cases and HK$300 million at the end of June.

The number of cases was the highest since the second quarter of 2016, mReferral Mortgage Brokerage Services said, citing a 3.8 per cent fall in home prices in the third quarter as the reason for the surge.

HKMA noted the cases generally have a higher loan-to-value ratio.

Home prices in the financial hub, among the most unaffordable property market in the world, fell 8.1 per cent in the first nine months of this year, and are down 9 per cent from an all-time peak in September last year, dragged down by rising interest rates and a pessimistic economic outlook.

($1 = 7.8494 Hong Kong dollars)