The number of residential mortgage loans in negative equity fell 40% over the quarter ending March to about 40,000 cases with an aggregate value of $66 billion.

Announcing the results in its latest survey on residential mortgage loans today, the Monetary Authority said the unsecured portion of these loans is estimated to be about $13 billion, down from $23 billion at end of last year.

The overall loan-to-value ratio on negative equity loans fell to 125% from 128% at the end of 2003 as a result of upward revaluation in the collateral coupled with reduced outstanding balances arising from continued loan repayments.

Reflecting the higher associated risks of loans left in the portfolio, the weighted average interest rate of the outstanding negative equity residential mortgage loans was 0.74% below the best lending rate, compared with 0.94% at the end of 2003.

The three-month delinquency ratio of negative equity of loans rose to 2.19% from 2.11%, due largely to the contraction in the total outstanding value loans in negative equity.

The amount of delinquent negative equity residential mortgage loans, fell by more than 35%, alongside the improving economic conditions which helped strengthen homeowners' repayment ability.

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