Past-due home loans continued to run at historically low levels in the first quarter, reflecting the benefits of low interest rates and a stabilizing economy.
The delinquency rate inched up by five basis points in the quarter, to 4.29%, the Mortgage Bankers Association of America said Wednesday. The 4.24% rate reported in the previous quarter was the lowest since 1974.
Much Good News Lately
The new data provided the latest in a string of bullish news reports for the mortgage and housing markets. Low rates have fueled a surge in refinancings and stronger demand for new loans. Meanwhile, low prices and an improving economy have brightened the outlook for the sale of homes.
"If our expectations of increased employment are correct, this along with the continuing refinancing boom gives us solid reasons to believe delinquency rates will decline over the rest of this year," said Warren Lasko, executive vice president of the Mortgage Bankers Association.
Gareth Plank, an analyst in San Francisco with Mabon Securities Inc., said the figures showed an emerging stability in the economy.
Positive Sign on Jobs
"It's definitely a plus," he said. "It indicates a strength in the overlying economy, because people need those jobs to make those mortgage payments."
But Mr. Lasko conceded that the economy, while not in a recession, was hardly booming. "These numbers are reflective of the fact that our economic recovery is in a holding pattern."
The survey's figures are seasonally adjusted. Unadjusted, delinquencies showed moderate declines from the previous quarter in all regions, as in typical in first quarters.
Rates Essentially Flat
The base delinquency rate measures loans past due by 30 days or more.
The survey found that rates were essentially flat for all categories of overdue loans. The percentage of mortgages past due by 30 to 59 days rose five basis points, to a seasonally adjusted 2.89%. For payments 60 to 89 days late, the rate dropped two basis points, to 0.63%. Delinquencies of 90 days or more climbed two basis points, to 0.77%.
Mortgages in foreclosure declined slightly, to 1.00% of all home loans.
Rise in Home Sales Helps
The mortgage association said the small rise in delinquency rates was not surprising in the aftermath of the hefty 36-basis-point drop in the fourth quarter.
Economists with the association said the low delinquency rates reflect rises in housing starts and home sales in the fourth quarter. Delinquencies tend to be smaller on recent loans.
Also, historically low interest rates have made it possible for homeowners to refinance home loans and reduce their monthly payments. Borrowers with adjustable-rate mortgages have also seen their rates drop.
The association adjusts its data to reflect seasonal factors, such as homebuying and holiday spending patterns. The adjustment provides a clearer picture of trends in the market.
Across the Country
On an unadjusted basis, delinquency rates declined sharply across the country. Even economically strapped California showed a decrease of 37 basis points, to 3.36%, from the level in the fourth quarter.
The unadjusted rate in the Northeast declined to 4.16%, a 71-point drop. In the North Central region the rate fell 75 basis points to 3.94%. In the South, the 4.53% delinquency rate was down 71 basis points since the fourth quarter of last year.
Mr. Lasko said the survey showed stability in the mortgage market. And despite the faltering consumer confidence reported on Wednesday, he was optimistic about the remainder of the year.
"On balance, we do expect things to get better," he said.