In the last quarter of Hong Kong, 12,164 cases of negative assets soared nearly 22 times quarter-on-quarter, hitting a new high in the first quarter of 2005

In 2022, property prices in Hong Kong will fall by 15.59% for the whole year, the largest annual decline since 1998.

Property prices fell, and the number of cases of negative equity also rose sharply.

The Hong Kong Monetary Authority announced today (31st) that by the end of the fourth quarter of 2022, residential mortgage loans in negative equity increased sharply to 12,164, not only a 21.8-fold increase from the 533 in the previous quarter, but also after 14,040 in the first quarter of 2005. The largest number of cases of negative equity.

The number of negative assets accounted for the total number of residential mortgage loans, which climbed to 2.1% from 0.09% in the third quarter of last year; the total amount of outstanding loans involved increased from 3.006 billion yuan to 66.252 billion yuan, an increase of 21 times, accounting for outstanding The percentage of total loan repayment is 3.66.

According to the HKMA, the number of residential mortgage loans in negative equity increased from 533 at the end of the third quarter of 2022 to 12,164 at the end of the fourth quarter of 2022.

These cases involved residential mortgage loans or loans under the Mortgage Insurance Scheme for bank staff, and the LTVs for such loans are generally high.

The unsecured portion of residential mortgage loans in negative equity increased from $59 million at the end of the third quarter of 2022 to $2.517 billion at the end of the fourth quarter of 2022.

The amount of outstanding loans involved increased to 66.25 billion yuan

Since the first quarter of 2011, the bank has not recorded any residential mortgage loans in negative equity that are more than 3 months in arrears.

It is worth noting that the figures obtained in this survey only refer to the first mortgage loans provided by banks and known to be negative assets (that is, the outstanding loan amount owed to the respondent institution exceeds the current market value of the mortgaged property), and does not include second mortgage loans. Together with the secondary mortgage, the residential mortgage loan is a negative equity loan.

Since banks do not have information on customers' outstanding loans on secondary mortgages, it is impossible to know how many of them are in negative equity.

The mortgage loans of the authorized institutions surveyed accounted for about 99% of the total mortgage loans of the entire banking system.

The findings were extrapolated to estimate the negative equity mortgage situation across the banking system.

Regarding the sharp increase in the number of negative equity loans in the last quarter, Ruan Guoheng, vice president of the Financial Services Bureau, pointed out: "The number of negative equity residential mortgage loans in the fourth quarter of 2022 rose sharply, mainly because residential property prices fell by 8.5% in the first three quarters of last year. It fell another 7.7% in the quarter.

These negative equity cases involved housing mortgage loans for bank staff and loans under the Mortgage Insurance Scheme. These loans generally have higher LTV ratios, and loans under the Mortgage Insurance Scheme account for a relatively large proportion.

The original intention of the Mortgage Insurance Scheme is to help the public buy homes on a risk-based basis.

The plan has strict requirements on the repayment ability of the applicant. The applicant needs to meet specific qualifications, including a contribution-to-income ratio capped at 50%, and must also meet the bank stress test.

If you want to build mortgage insurance that exceeds 80% of the property price, the mortgage insurance plan has additional requirements for applicants, including first-time home buyers and regular salary earners.

It is worth pointing out that the latest delinquency ratio of loans under the mortgage insurance scheme is only 0.01%, which is lower than the overall mortgage loan delinquency ratio of the banking industry (0.06% at the end of December 2022), indicating that the loan quality under the mortgage insurance scheme is very good. The risk of bank mortgage business is controllable.

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The Census and Estimates Department's property price index fell another 2% in December, and fell by more than 15% for the whole year, the largest annual decline since 1998. In 1997, they were in negative assets ?

Ho Wing-hsien is worried about the good news of customs clearance, saying that property prices have not fallen sharply: the negative equity is far less than that of SARS