Updated at 6.45pm: A homeowner caught in a 'negative equity' trap may typically pay up to HK$2,000 a month more for a mortgage loan, than a borrower with an investment of positive equity in his property. In a worst-case scenario the penalty rate might rise above HK$2,500 a month. The flip side of same coin is that a lender to a 'negative equity' owner may be earning an extra HK$2,000 to HK$2,500 a month or HK$24,000 to HK$30,000 a year from a borrower likely to be least able to afford the premium. As interest rates have tumbled this year, this payment gap has widened to the point where it is now opening a sharp divide between politicians and bankers. The former want to be seen to be doing something to help increasingly cash-strapped negative equity owners; the latter complain that engineering quick-fixes to mortgage repayments is not the answer to systemic problems in Hong Kong's property market. This week's relaxation by the Hong Kong Monetary Authority (HKMA) of loan-value guidelines frees banks to lend up to 100 per cent of a property value, and will bring some relief to borrowers left under water by falling property prices caused by the 1997/98 Asian financial crisis. In 1998, when mortgage rates were at their last peak of around 11 per cent,the monthly repayment on a HK$1 million mortgage repayable over 20 years was HK$11,321.88. Today, falling interest rates and the mortgage price war between banks has brought that monthly repayment down to HK$5,421.66 (based on a mortgage rate of prime minus 2.75 per cent paid by a low-risk 70 per cent loan-value customer). But owners of properties whose market values have fallen below their original loan values could not refinance their old loans at the new low interest rates because until this week's relaxation, that was outlawed by the HKMA guideline. Typically, according to bankers, these home-owners may still be paying prime plus one per cent though some critics the Financial Secretary among them feared that in some cases customers may still be paying prime plus two per cent or worse.