Hong Kong mortgage loans that exceed the property’s value are likely to reach their highest since 2005 next year if home prices keep falling, according to Bloomberg Intelligence.
(Bloomberg) — Hong Kong mortgage loans that exceed the property’s value are likely to reach their highest since 2005 next year if home prices keep falling, according to Bloomberg Intelligence.
Negative-equity mortgages may surge beyond 5% of home loans in 2024, analysts Francis Chan and Patrick Wong wrote in a note published Wednesday. That’s based on their prediction that secondary home prices will tumble another 10% in the next 12 months.
Rising interest rates are weighing on the city’s home market, with used property values falling 18% from their peak in 2021, according to data from Centaline Property Agency Ltd.
Banks may struggle with losses and foreclosures stemming from a higher number of underwater mortgages, according to BI. Delinquencies could cause 2024 credit costs at BOC Hong Kong Holdings Ltd., Hang Seng Bank Ltd. and Bank of East Asia Ltd. to increase beyond consensus, the analysts estimate.
HSBC Holdings Plc’s outstanding mortgages in Hong Kong amounted to HK$802 billion ($103 billion) in the first half, followed by BOC Hong Kong’s HK$421 billion. Home loans accounted for almost 36% of all lending in the city for HSBC, including its subsidiary Hang Seng Bank.
Hong Kong has seen the number of foreclosed homes rise, with such properties for sale climbing to the most since 2009 in September. Banks have been struggling to offload them despite discounts.
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