HKMA reports sharp drop in negative equity mortgages
HKMA reported negative equity residential mortgages fell 61.9% to 4,356 cases at end-June 2026 from 11,424 at end-March.
The decline suggests improving property valuations, though remaining cases are concentrated in high-LTV staff loans and mortgage insurance programme loans. Credit risk in the mortgage book appears easing but sensitivity to property price shocks persists.
Signals evolving credit risk profile in HK mortgage portfolios and informs capital and provisioning assumptions.
Action Required
Refresh mortgage portfolio stress tests and LTV concentration analysis to reflect improved but still concentrated negative equity exposure.
Material change in a headline credit risk indicator for HK banks.
Negative equity cases down 61.9% QoQ, easing mortgage credit risk. Residual exposure concentrated in high-LTV staff and insured loans; maintain vigilance on property price sensitivity in stress scenarios.
“HKMA announced 4,356 RMLs in negative equity at end-June 2026, down 61.9% from 11,424 at end-March 2026, mainly bank staff housing loans or mortgage insurance programme loans with higher LTV ratios.”
Published: 2026-07-31