According to the latest data released by the HKMA, there were 40,713 cases of negative assets in the third quarter of this year, involving an amount of 207.51 billion yuan. Compared to 30,288 cases and 154.992 billion yuan recorded in the second quarter, the number of cases and amounts increased by 34.4% and 33.9% respectively per quarter, with the number of cases reaching a new high nearly twenty-one years since the fourth quarter of 2003.

Chief Vice President Cao Deming of the mortgage referral continued, stating that after the government lifted cooling measures earlier this year, the property market rebounded slightly, but the lifting of the cooling measures did not continue. Additionally, high interest rates, developers offering properties at low stock prices, and the fact that property prices have already risen have evaporated and fallen. According to the Rating and Valuation Department, the private residential property price index for the third quarter of this year was reported at 292.8 points, marking the lowest quarterly level in nearly eight years since the third quarter of 2016. It plummeted by 26.4% compared to the historical high of 397.9 points in the third quarter of 2021. Since 2019, when the government relaxed the loan-to-value ratio limit for mortgage insurance, the number of mortgage insurance cases reached a historical high in 2021, and the proportion of buyers using higher loan-to-value ratios has significantly increased in recent years. Therefore, property prices have fallen by over 20% from their peak, and most owners who entered the market when prices were high and with higher loan-to-value ratios are more likely to fall into negative assets, resulting in the quarterly rise in negative assets in the third quarter.

Cao Deming further indicated that the interest rate reduction cycle has begun, and the market expects the Federal Reserve to reduce rates by 1/4 point each in November and December. This will further lower local interest rates. Additionally, with the introduction of various relaxed mortgage measures in the latest Policy Address, it will boost the property market and accelerate the pace of homebuyers and investors entering the market. Recently, many developers have increased prices for new properties and remaining units for sale. It is expected that property prices will stabilize and stop falling by the end of the year, and there is a chance that cases of negative assets will also reverse from their high levels.

Furthermore, Cao Deming stated that although the number of negative asset cases is rising, it does not mean that owners are unable to make repayments. Over the past decade, the ability of Hong Kong property owners to repay loans has been at a stable level. Among negative asset cases, the delinquency rate for mortgage loans unpaid for over 3 months is 0.13%, showing a slight increase but still at a low level. This indicates that the repayment capacity of the vast majority of property owners remains stable, and the risks of bank lending are manageable. Cao reminds prospective property buyers to assess their own financial and repayment capabilities carefully, avoid over-borrowing, and remember to make timely repayments and reserve at least six months of emergency funds.