Acting Secretary for Housing Elaine Chung Lai-kwok said the Housing Society, which oversees the two loan schemes, would start receiving applications for the scheme from Thursday.

Applicants must have had their current monthly income reduced by 15 per cent or more, have mortgage and loan payments that exceed 50 per cent of their monthly income and net assets not exceeding $80,000 for single people or $120,000 for families.

'We hope those loan recipients who have genuine financial difficulties will make use of the opportunity to tide them over their financial problems,' Ms Chung said.

But Virginia Ip Chiu-ping, chief secretary of the People's Council on Housing Policy, said the help had come too late for many people who were in difficulty and had already declared bankruptcy. She also said the terms under which applicants could apply were too harsh and only a few people would qualify. 'It is more a sweetener than a real offer to help,' she said.

The Negative Equity Revitalisation Organisation said the offer was not enough. It suggested the Housing Society extend the repayment period of the loans from the existing 10 to 13 years to 15-20 years. The group has estimated there are more than 100,000 people experiencing negative equity in Hong Kong, while the Monetary Authority's estimate of 73,000 households in negative equity is considered to be at the lower end of market estimates.

The Hong Kong Mortgage Corporation has announced it is considering introducing a scheme to allow homeowners with negative equity to refinance mortgages.