The percentage of U.S. residential mortgages that were delinquent or in foreclosure edged down in the first quarter from the same quarter a year earlier, thanks to an improving economy, a mortgage industry group said on Tuesday.
At the end of the first quarter, the mortgage delinquency rate was 4.31 percent, down from 4.46 percent in the same quarter of 2004 and down from 4.38 percent at the end of the fourth quarter of last year, the Mortgage Bankers Association said.
The figures are seasonally adjusted and apply to one-to-four unit residential properties.
The new foreclosure rate on mortgages was 0.42 percent at the end of the first quarter, down from 0.47 percent in the year-ago quarter and 0.46 percent at the end of the fourth quarter.
During the first quarter of 2005, the U.S. economy grew at almost 3.5 percent in annualized real terms, adding 180,000 jobs a month, Douglas Duncan, the MBA’s chief economist and senior vice president, said in a statement accompanying the survey.
That, combined with the low interest rate environment, helped consumers strengthen their household finances, increasing the percentage of homeowners making their mortgage payments on time to nearly 96 percent, he said.
“Economic growth is expected to remain strong over the next couple of years. Likewise, job growth should be steady in the presence of modest interest rate rises,” Duncan said. “These expectations likely mean we will continue to see moderate declines in delinquencies for the next few quarters.”
The inventory of loans in the foreclosure process edged down to 1.08 percent at the end of the first quarter, from 1.29 percent in the year-ago period and 1.15 percent in the previous quarter.
Seasonally adjusted delinquencies for adjustable-rate mortgages (ARM) and fixed-rate products are generally down from last year and the previous quarter. Over the year, the seasonally adjusted delinquency rate for prime ARM products is down to 2.06 percent from 2.28 percent. The percentage among prime fixed-rate products increased to 2.02 percent from 2.00 percent.
Since the first quarter of 2004, the seasonally adjusted delinquency rate for subprime ARM products has decreased to 10.25 percent from 10.99 percent, while the rate for subprime fixed rate products fell to 9.10 percent from 10.63 percent.
For the first time, the MBA presented the seriously delinquency rate, which is defined as the non-seasonally adjusted percentage of loans that are delinquent for 90 days or more or are in the process of foreclosure.
In the first quarter of 2005, the percent of loans that were seriously delinquent was 1.89 percent, down 18 basis points from the fourth quarter of 2004 and 25 basis points lower than the first quarter 2004.
The MBA has conducted the National Delinquency Survey on a quarterly basis since 1953. The survey covers more than 38 million loans, representing more than 80 percent of all first-lien residential mortgage loans in the United States.
