Late Mortgage Payments Up in Final Quarter

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The Mortgage Bankers Association, in its quarterly mortgage survey, reported Thursday that the percentage of mortgage payments that were 30 or more days past due for all loans tracked rose to 4.70 percent in the October-to-December quarter of last year.

That was up from the prior quarter's 4.44 percent delinquency rate and was the highest since the second quarter of 2003.

The association's survey covers 41.2 million loans.

One factor in the growth of late mortgage payments is the problems people faced in the communities devastated by last year's hurricanes, which have pushed up delinquency rates in Louisiana and Mississippi, the association said.

But other factors also played a role.

"We have been expecting an uptick in delinquencies due to a number of factors: The seasoning of the loan portfolio, the increased share of the portfolio that are adjustable-rate mortgages and subprime mortgages as well as the elevated level of energy prices and rising interest rates," said Doug Duncan, the association's chief economist.

Rising interest rates can raise monthly payments for people on adjustable-rate mortgages. People who stretched financially to buy a home and have an ARM are more likely to feel the strain on their budgets from rising rates. Meanwhile, "subprime" borrowers _ people with weaker credit records who are considered higher risks _ also can face problems when rates rise and energy costs stay high.

If the impact of the hurricanes is removed from the mortgage survey, the fourth quarter delinquency rate decreases to 4.55 percent, the association said.

The association's survey also showed that the percentage of mortgages that started the foreclosure process in the fourth quarter of last year edged up to 0.42 percent, from 0.41 percent in the third quarter. Even with the slight increase, the foreclosure figure is still considered low.