Home mortgage delinquency rates rose sharply in the second quarter, possibly marking the beginning of long-term climb.
The Mortgage Bankers Association of America reported Tuesday that 4.15% of all home loans were at least 30 days past due on June 30, up 24 basis points from the March 31 level.
And serious delinquencies - late by at least 90 days - jumped more than in any other quarter in nine years, the trade group said. These loans climbed to 0.77% of all mortgages from 0.71% in the first quarter.
Delinquency rates had been edging down for three years, assisted by lower-rate refinancings and improvement in the economy. In the first quarter they hit the lowest level in 20 years.
The second-quarter increase signals an inevitable shift, said Warren Lasko, executive vice president of the Washington trade association.
"The downward trend is definitely over," Mr. Lasko said. "We expect a flat to slightly rising trend in delinquencies in quarters ahead."
The economy, he said, is close to peaking after several years of growth, and some of the loans spawned by the refinancing boom of the early 1990s are sure to sour.
The Mortgage Bankers Association found that delinquencies on all types of loans - conventional as well as government-insured - rose in the three months through June. The rise affected all regions of the country.
Foreclosure rates also increased slightly for all types of loans. Some 0.65% of conventional loans were in foreclosure at the end of the second quarter, 3 basis points more than on March 31, the trade group found.
The findings are based on quarterly surveys of 280 mortgage lenders with more than 21 million loans. The volume represents about one-third of all residential loans outstanding.
Mortgage bankers said the latest uptick was not surprising, given the booming business they did during interest rate declines in the early 1990s.
"It doesn't sound that bad," said Ron Gaither, vice president and treasurer of Prudential Home Mortgage Co., Frederick, Md.
The industry, he said, is "coming off a period of refinancing, and some of those loans are beginning to season out."
Many lenders were conservative during the past few years and will weather the coming quarters with fewer poorly performing loans, he said.
Some of loans "will turn sour, but you won't see a really large increase in delinquency rates," said David Lereah, the association's chief economist.
He said he would be surprised if the delinquency rate hit 4.5% over the next year.
Instead of heading straight up, delinquency rates may even fall in some of the quarters ahead, Mr. Lereah said.
Among geographic areas, the West, including recession-hit California, saw the largest increase in delinquencies. Western loans past due by at least 30 days rose to 3.67%, from 3.23% in the first quarter. The West and the North Central states, whose rate rose 23 basis points to 3.59%, still lag the national rate of 4.15%
The South, with a 4.67% delinquency rate, and the Northeast, with 4.36%, top the national average.
Though foreclosure rates rose from quarter to quarter, the rates declined on an annual basis. The Northeast's second-quarter rate of 1.36% reflects a 19 basis-point slide from a year earlier.
The foreclosure rate slid by 18 basis points, to 0.53%, in the North Central region; by 12 basis points, to 0.75% in the South; and by 9 basis points, to 1.01%, in the West.
