Originally created 09/09/04

Mortgage delinquencies slightly higher in second quarter

WASHINGTON -- The percentage of homeowners behind on mortgage payments rose slightly during April-June, but the increase is considered a temporary blip in a downward trend since mid-2001.

The Mortgage Bankers Association reported in its quarterly survey Wednesday that the seasonally adjusted percentage of mortgage payments 30 or more days past due rose in the second quarter to 4.43 percent, up from 4.33 percent in the first quarter. The second-quarter performance marked the second-lowest delinquency rate since the third quarter of 2000, when the economy was flourishing.

"Based on the continued expansion of the economy and strong home-price growth in many regions, it is unlikely this small upward blip represents a reversal of the downward trend in delinquencies we have seen since the middle of 2001," said Douglas Duncan, the association's chief economist.

The news came as Federal Reserve Chairman Alan Greenspan said the economy has "regained some traction" after a late spring slowdown triggered by a sharp spike in oil prices.

The percentage of mortgages that started the foreclosure process declined to 0.39 percent in the second quarter from 0.46 percent in the first quarter. Foreclosures typically lag delinquencies by a quarter or two.

The association's survey covers roughly 37 million mortgage loans.

Rates on 30-year mortgages hit a high for this year of 6.34 percent in the week of May 13. Since then, rates, while bouncing around, have slowly drifted downward as economic activity cooled in the late spring and early summer.

The average rate on a 30-year mortgage dropped last week to its lowest level in five months, 5.77 percent.

On the Net:

Mortgage Bankers Association: http://www.mortgagebankers.org


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