Rising interest rates have had a dampening effect on the number of applications received by the Hong Kong Mortgage Corporation for its mortgage insurance programme (MIP). The Hong Kong Mortgage Corporation and mortgage broker mReferral said the total number of applications received for the MIP, which gives homebuyers loans of up to 95 per cent of the value of their purchases, began to decline after peaking at 2,985 in May last year. The number of applicants fell to 728 in November. Midland Realty chief analyst Buggle Lau Ka-fai said heavy interest rates were discouraging people from applying for 90 per cent to 95 per cent mortgages. Fewer people applying for high loan-to-value financing would mean fewer people ending up in negative equity situations. High loan-to-value financing has been identified as a key reason for the recent increase in the number of households in negative equity. MIP applicants fall into the negative equity category when home prices decline by more than 5 per cent. But Hendrick Leung Lee-chung, Centaline Finance director and general manager, said the 90 per cent and 95 per cent mortgages have had a positive effect on the property market. 'These loans have helped the younger generation who don't have big chunks of cash for down payments to enter the market,' he said. 'These buyers have been a stimulus to the market.'