The slight adjustment to the market might affect some high LTV borrowers but should not result in widespread hardship
The term 'negative equity mortgages' has recently re-emerged, along with its negative connotation. However, there are two counterbalancing viewpoints.
First, as historical performance has shown, Hong Kong mortgagors are extremely resilient and committed to honouring their financial obligations, even when in severe negative equity.
And second, the recent high loan-to-value (LTV) mortgage financing schemes have empowered first-time buyers, who otherwise would have been unable to buy their homes.
Given the rapid rebound in property prices post-Sars in 2003, prices have reached unattainable levels, making it difficult for many prospective buyers to make the 30 per cent down payment.
Therefore, the small and healthy adjustment that the property market is experiencing may place some of these high LTV borrowers in a slightly negative equity position.
