Mortgage delinquencies in the fourth quarter were at their highest level since the first quarter of 1996.

The Mortgage Bankers Association's quarterly report showed 4.36% of home loans surveyed to be 30 or more days past due, a 10-basis-point jump from the third quarter.

Much of the rise came from borrowers with adjustable-rate mortgages. The delinquency rate for ARMs increased 37 basis points, to 5.0%; fixed-rate mortgages were unchanged, at 3.25%.

David Lereah, the MBA's chief economist, attributed the rise in ARM delinquencies to upward adjustments in rates for many borrowers whose loans were originated with low teaser rates in the second half of 1996. When the interest rates rose, some borrowers had more trouble keeping their loans up to date.

Increases in the most serious categories of delinquency-loans more than 60 days and more than 90 days past due-accounted for most of the increase. Sixty-day delinquencies increased 3 basis points, to 0.71%, and delinquencies of90 days or more rose 5 basis points, to 0.62%.

Foreclosures also increased in the fourth quarter. Loans in which foreclosure started increased 2 basis points, to 0.37%, while loans in foreclosure increased 2 basis points, to 1.11%

Delinquency rose in all four regions covered in the survey. In the West the rise was only 5 basis points, and the 3.7% rate was the lowest. The increase in the South was the most dramatic- 20 basis points, to 5.21%.

Still, the rise in delinquencies was not a major cause for concern, industry observers said. The 4.36% rate is still 11 basis points lower than at the end of the first quarter of 1996.

"Delinquency is still low-up, but low-which is not surprising given low unemployment, low interest rates, and the refinancing wave that's ensued," said Mark M. Zandi, chief economist of Regional Financial Associates.

And it seems the rise could be short-lived. Some lenders have already reported declines during the first quarter.

Countrywide Credit Industries Inc., the industry's second-largest lender, had delinquency rates of 4.41% in December but only 4.03% in January and 3.91% in February.

Similarly, the rates at Resource Bancshares Mortgage Group improved from 3.21% in November to 2.78% in December and 2.77% in January.

Low interest rates in January and February prompted many borrowers, including those with ARMs, to refinance. This could reduce delinquency in future quarters, Mr. Zandi said.

However, he added, delinquencies could rise over the longer term as more borrowers take out riskier high-loan-to-value mortgages and home equity loans.

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