Hong Kong negative equity cases drop to 3,819 in Q3 2026
Hong Kong's negative equity mortgage cases fell to 3,819 in Q3 2026 from 4,356 in Q2, with the total value dropping to HK$17.3 billion. The ratio of loans in arrears for over three months rose to 1.34 per cent as the decline in total value outpaced the fall in overdue amounts.
The Hong Kong Monetary Authority released its latest survey on negative equity residential mortgage loans at the end of the third quarter of 2026 on 30 October.
The number of negative equity mortgage cases stood at 3,819 at the end of Q3 2026, down from 4,356 at the end of Q2 2026. The cases mainly involved housing loans for bank staff or loans under the mortgage insurance scheme, which generally have higher loan-to-value ratios.
The total amount involved in negative equity residential mortgage loans fell to HK$17.3 billion at the end of Q3 2026 from HK$19.6 billion at the end of the previous quarter. The unsecured portion of these loans also decreased to HK$800 million from HK$900 million over the same period.
Despite the drop in total value, the ratio of negative equity loans in arrears for more than three months rose to 1.34 per cent at the end of Q3 2026 from 1.25 per cent at the end of Q2 2026. The HKMA explained that this was because the decline in the total value of negative equity loans was greater than the decline in the amount of arrears.
The survey only covers first-lien mortgage loans known to be in negative equity, where the outstanding loan amount exceeds the current market value of the property. It does not include cases where a second mortgage would put the loan into negative equity, as banks do not have data on borrowers' outstanding amounts under second mortgages.
Respondent institutions account for about 99 per cent of total mortgage lending in the banking system. The survey results are extrapolated to estimate negative equity mortgage conditions across the entire banking sector.
