Residential mortgage loans in negative equity: End of June 2026

On Fri, 31 Jul, the Hong Kong Monetary Authority announced the results of its survey on residential mortgage loans ("RMLs") in negative equity at end-June 2026. The estimated number of RMLs in negative equity was 4,356 cases at end-June 2026, representing a 61.9% reduction from 11,424 cases recorded at end-March 2026. These instances predominantly involve bank staff housing loans or RMLs under the mortgage insurance programme, characterized by generally higher loan-to-value ratios.

Aggregate Value and Unsecured Exposure

The aggregate value of RMLs in negative equity contracted by 64.4% to HK$19.6 billion at end-June 2026, down from HK$55 billion at end-March 2026. Concurrently, the unsecured portion of these loans declined to HK$0.9 billion at end-June 2026, compared to HK$2.8 billion at end-March 2026.

Delinquency Analysis

The three-month delinquency ratio of RMLs in negative equity rose to 1.25% at end-June 2026 from 0.5% at end-March 2026. This increase occurred because the aggregate value of RMLs in negative equity fell at a faster pace than the aggregate value of delinquent RMLs in negative equity.

Survey Scope and Limitations

Figures relate only to RMLs from authorized institutions on the basis of first mortgages where the reporting institution knows the loan is in negative equity, defined as the outstanding loan amount exceeding the current market value of the mortgaged property. Excluded are RMLs associated with co-financing schemes where second mortgages would indicate negative equity, as authorized institutions do not maintain records on second mortgage balances.

Industry Representativeness

The mortgage portfolios of the surveyed authorized institutions constitute approximately 99% of the industry total. Consequently, survey results have been extrapolated to estimate the position of the banking sector as a whole.