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Business

Hong Kong hit by rising foreclosures

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Business

Hong Kong hit by rising foreclosures

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COMING UP:Hong Kong hit by rising foreclosures

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00:00:02
>> Shaky times for property. In one of the most expensive places on earth to own a home. Forclosures in Hong Kong are on the rise nearly doubled their level last year. An experts warn, it's bound to get worst. Hong Kong has rules in placed to keep the bubble from bursting in its red hot property sector like only letting buyers to borrow a maximum of 60% of a properties value.
00:00:23
But that only applies to bank loans. Reuters' Clara Baldwin says unregulated lenders like finance companies are changing the game.>> Finance companies are offering loans on very harsh terms at higher levels than are officially recognized by Hong Kong's de facto central bank. Just as a point of contact some of the finance companies will lend up to 90 plus percent of the value of a property.
00:00:48
Which means that it's very, very easy for the value of that property to go under water.>> Buyers are finding themselves in trouble as the economy slumps and their incomes take a hit. Now they're struggling to pay back, not only huge loans. But also interest rates of up to 30% and it's not just ordinary folks taking a hit.
00:01:06
>> The people who are affected are across all types of homeowners. But the ones that are most interesting to us right now are the ones that are purchasing the luxury flats in Hong Kong. Because those tend to be the very, very wealthy people who can pay multi million dollar down-payments.
00:01:23
And if they're being impacted it shows that the stresses on the economy and on the property market in Hong Kong in particular are pretty extreme.>> So far Hong Kong authorities aren't admitting there's a problem with unregulated lenders. But the number of mispayments is clearly growing. According to one analyst, lenders last year have the right to foreclose on 1,000 properties.
00:01:43
And by the end of this year that number could rise to 15,000.