WASHINGTON – Late mortgage payments dropped sharply in the opening quarter of this year, a big improvement after delinquencies hit a 2 1/2-year high in the closing quarter of last year.
The Mortgage Bankers Association, in its quarterly mortgage survey released Monday, reported that the percentage of mortgage payments that were 30 or more days past due for all loans tracked dropped to 4.41 percent in the January-to-March quarter.
That was down from the prior quarter's delinquency rate of 4.70 percent, the highest since the second quarter of 2003.
The association's survey covers 41.3 million loans.
The first quarter's improvement was attributed to strong economic growth and a good jobs climate in the first quarter, which helped some households better cope with the negative effects of rising borrowing costs and high energy prices.
"The economy grew at a brisk 5.3 percent pace in the first quarter of 2006 and the labor markets were quite strong as well with an average of 176,000 jobs added per month," noted Doug Duncan, the association's chief economist. He said these "offsetting positive factors ... were particularly important in the first quarter."
The 4.41 percent delinquency rate for the first quarter was the lowest since the second quarter of 2005.
Even with the improvement, late payments are still being affected by fallout from last year's Gulf Coast hurricanes.
If the impact of the hurricanes is removed from the mortgage survey, the first-quarter delinquency rate dips to 4.31 percent.
The association's survey also showed that the percentage of mortgages that started the foreclosure process in the first quarter of this year edged down to 0.41 percent. That was down from 0.42 percent in the fourth quarter and was the lowest since the third quarter of 2005.
The survey was taken before a big runup in energy prices. Oil prices hit a record high of more than $75 a barrel in late April. That helped propel gasoline prices beyond $3 a gallon in many areas.
Interest rates also are climbing. The Federal Reserve boosted rates on May 10 and are expected to bump them up again later this month to keep inflation from taking off.
Looking ahead, higher interest rates and energy prices could make it harder for some families to pay their mortgages on time.
"Additional modest increases in delinquency and foreclosure rates are likely in the quarters ahead," Duncan said.