Negative equity mortgages drop 61.9 percent to 4,356 cases
Hong Kong residential mortgage loans in negative equity dropped 61.9 percent to 4,356 cases at the end of June 2026. The Hong Kong Monetary Authority reported a 64.4 percent decline in total aggregate value to HK$19.6 billion.
A sharp contraction in underwater loans
The Hong Kong Monetary Authority reported a substantial contraction in underwater property loans during the second quarter of 2026.
Residential mortgage loans in negative equity dropped to 4,356 cases by late June, representing a 61.9 percent decline compared to 11,424 cases at the end of March.
In parallel, the aggregate value of these distressed loans fell 64.4 percent from HK$55 billion to HK$19.6 billion.
The unsecured portion of negative equity mortgages shrank from HK$2.8 billion to HK$0.9 billion.
Officials noted that the remaining affected cases consist primarily of bank staff housing loans and mortgages backed by insurance programs, both of which feature higher initial loan-to-value ratios.
Math skews the delinquency metric
Despite the overall volume reduction, the three-month delinquency ratio for negative equity loans climbed to 1.25 percent from 0.5 percent in March.
This ratio increase reflects a mathematical artifact: the total pool of underwater loans contracted at a faster pace than delinquent balances.
The survey covers first mortgages from institutions accounting for roughly 99 percent of industry lending, though it excludes secondary financing where total debt details are unavailable.
Relief with a statistical caveat
The steep decline in negative equity cases signals welcome relief for Hong Kong property owners and mortgage lenders.
However, the rise in delinquency rates shows that localized distress persists among highly leveraged borrowers.
A complete picture remains obscured because the survey omits second mortgages and secondary financing arrangements.