Hong Kong negative equity mortgages halve to 11,424
The Hong Kong Monetary Authority reported a 46.4 percent drop in residential mortgage loans in negative equity to 11,424 cases at the end of March 2026. The aggregate value of these loans also decreased by 47.8 percent to HK$55 billion.
Cases and values plummet
The estimated number of residential mortgage loans (RMLs) in negative equity in Hong Kong significantly decreased by 46.4 percent, falling to 11,424 cases at the end of March 2026 from 21,304 cases at the end of December 2025.
This substantial reduction was mirrored in the aggregate value of these RMLs, which dropped by 47.8 percent to HK$55 billion at end-March 2026, down from HK$105.4 billion in the preceding quarter.
The unsecured portion of these loans also saw a notable decline, decreasing to HK$2.8 billion from HK$6.2 billion.
The Hong Kong Monetary Authority (HKMA) noted that these cases primarily involve bank staff housing loans or RMLs under mortgage insurance programmes, which typically feature higher loan-to-value ratios.
The survey covers approximately 99 percent of the industry's total mortgage portfolios, with results extrapolated to estimate the position of the banking sector as a whole.
Delinquency ticks up, data gaps persist
Despite the overall improvement in negative equity figures, the three-month delinquency ratio for RMLs in negative equity experienced a slight increase, rising to 0.5 percent at the end of March 2026 from 0.31 percent at the end of December 2025.
The HKMA clarified that the survey figures pertain exclusively to first mortgages provided by authorized institutions where the negative equity status is known.
Crucially, these statistics do not encompass RMLs associated with co-financing schemes that would be in negative equity if second mortgages were factored in.
The full extent of negative equity in such cases remains unquantified, as authorized institutions do not maintain records on the outstanding balances of second mortgages.
This limitation means the reported figures might not capture the complete picture of market vulnerability.
Recovery, but hidden risks persist
The sharp decline in negative equity cases offers a welcome sign of stabilization in Hong Kong's property market.
However, the slight uptick in the delinquency ratio, though still low, suggests that some borrowers continue to face challenges.
The exclusion of second mortgages from the data also means the full picture of market vulnerability remains partially hidden.