Hong Kong Monetary Authority: The number of negative equity mortgages in Hong Kong dropped to 4,356 at the end of the second quarter, a decrease of 61.9% compared to the previous quarter.

On July 31, the Hong Kong Monetary Authority announced the results of the investigation into negative equity residential mortgage loans at the end of the second quarter of 2026. The data showed that the number of negative equity residential mortgage loans at the end of the second quarter of 2026 was 4,356, a decrease of 61.9% from 11,424 at the end of the first quarter. These cases primarily involved housing mortgage loans or mortgage insurance plans for bank employees, and such loans generally have a higher loan-to-value ratio. The amount involved in negative equity residential mortgage loans decreased by 64.4%, from HKD 55 billion at the end of the first quarter to HKD 19.6 billion at the end of the second quarter. The unsecured portion of negative equity residential mortgage loans decreased from HKD 2.8 billion at the end of the first quarter to HKD 900 million at the end of the second quarter. It is noteworthy that since the decline in the amount involved in negative equity residential mortgage loans was greater than the decline in the amount of overdue negative equity residential mortgage loans, the ratio of negative equity residential mortgage loans overdue for more than three months increased from 0.5% at the end of the first quarter to 1.25% at the end of the second quarter. The figures obtained from this survey only involve first mortgage loans provided by banks that are known to be in negative equity (i.e., the unpaid loan amount owed to the surveyed institutions exceeds the current market value of the mortgaged property), and do not include second mortgages. When second mortgages are included, they would belong to the category of negative equity loans. As banks do not have information on the unpaid loan amounts for second mortgages, it is not possible to ascertain how many of them fall under the category of negative equity loans. The mortgage loan amounts from the surveyed recognized institutions account for approximately 99% of the total mortgage loans in the banking system, and the survey results are extrapolated to estimate the negative equity mortgage loan situation in the entire banking system.