Homeowners with negative equity can benefit from an easing of restrictions
Boutique mortgage refinancing firm Pan Asian Mortgage plans to expand a scheme targeting homeowners with negative equity after attracting 1,200 clients in its first year.
Two partner banks - Asia Commercial Bank and Citic Ka Wah Bank - approved $2.5 billion worth of mortgage refinancing deals in the year to last month, with about 70 per cent of applications accepted, Pan Asian chief executive Leland Sun Li-hsun said.
With residential prices in Hong Kong still in decline, recent property buyers are looking to escape the trap of having mortgage debts that exceed the value of their properties.
'Our estimate of the number of negative-equity homeowners has increased substantially since the end of last year,' Mr Sun said.
'Specifically, we have seen applications from homeowners who bought property in 2000 and 2001. These particularly are homeowners who have bought property with a second mortgage or with mortgage insurance.'
Pan Asian's SuperFirst Negative Equity Mortgage Refinancing Programme, which was launched in May last year, allows negative-equity homeowners to refinance their mortgages by borrowing up to 140 per cent of the underlying property value.