A Hong Kong Mortgage Corp (HKMC) scheme designed to help more than 67,500 homeowners with negative equity has failed to win support from most banks. Of the 26 banks which signed a letter of intent last month to take part in the mortgage-refinancing scheme, only two - American Express Bank and Dah Sing Bank - have offered products specifically catering to negative-equity borrowers. Under the programme, HKMC will provide insurance enabling banks to offer loans up to 140 per cent of a property's value. Many homeowners who bought property during the boom years have been unable to refinance their loans at lower rates because the value of their flats has fallen. HSBC, Liu Chong Hing Bank and Shanghai Commercial Bank said they would not target this segment of the market as most of their negative-equity homeowner clients had already restructured their loans at below the prime rate. Core Pacific-Yamaichi banking analyst Bonnie Lai said the lack of interest from major banks was understandable. No bank would offer mortgage refinancing to negative-equity homeowners whose mortgage payments exceeded 50 per cent of their monthly income, Ms Lai said. She said most banks did not want to commit heavily to the home mortgage business due to the significantly reduced yields amid intense competition and the depressed state of the property market. Lawrence Law, head of HSBC's personal finance mortgage services said: 'We will not aggressively lure negative-equity homeowners. 'We've been helping our negative-equity customers with sound repayment ability and good relations with us by granting them preferential terms, such as lower mortgage rates.' According to HKMC figures, 67,500 residential mortgage loans worth HK$115 billion (not including loans with co-financing arrangements) were in negative equity as of March 31. Of those, 38 per cent were still at or higher than prime. Brian Cheung, senior manager at Liu Chong Hing Bank, said the programme had limited market potential. Thousands of negative-equity homeowners had been unable to restructure their loans or secure better mortgage rates because they were either unemployed or had failed to pass credit checks. 'We're not keen to lend to this type of borrower,' Mr Cheung said. The bank is offering mortgage rates as low as 1.75 percentage points below prime, but this is confined to existing negative-equity homeowners with sound repayment ability, he said.