Residential mortgage defaults surged further last month to their highest level since compilation of delinquency data began in mid-1998, drawing a renewed warning from the Hong Kong Monetary Authority. The loan delinquency ratio - a measure of loans overdue for more than three months against total outstanding loans - rose to 1.23 per cent from 1.19 per cent in May. This compared with 0.29 per cent for June 1998, when the data was first collected. The ratio has risen in four consecutive months, up from 1.16 per cent in March this year. The delinquency ratio for loans overdue for more than six months also crept up slightly to 0.86 per cent last month from 0.85 per cent in May. 'Though still maintained at a low level, the delinquency ratio has increased in the past few months,' said Raymond Li, the authority's acting deputy chief executive. 'Banks should continue to closely monitor their asset quality and to adhere strictly to prudent lending criteria.' The authority issued the same warning last month. Gross new loans made in June rose 3.8 per cent to HK$10.1 billion after falling by 3.6 per cent in May. But new loans approved during the month dropped 7.1 per cent to HK$12.4 billion compared with 2 per cent in May, largely due to a drop in refinancing loans and loans to the secondary market. Refinancing loans fell in absolute terms for the first time in four months.