Late payments on mortgages dropped in the first quarter of 2006, after hitting a high in the fourth quarter of 2005. The number of mortgage payments that were 30 days or more past due dropped by 4.41 percent in the first quarter, according to the Mortgage Bankers Association's quarterly mortgage survey. In 2005, the final quarter brought the highest mortgage delinquency rate in two-and-a-half years. The improvement in mortgage delinquencies is partly due to strong economic growth and to a good job climate in the first quarter. The strength of the economy in these areas helped offset the negative effects of rising borrowing costs and high energy prices. "The economy grew at a brisk 5.3% pace in the first quarter of 2006, and the labor markets were quite strong as well, with an average of 176,000 jobs added per month," said Doug Duncan, MBA's chief economist. He pointed to "offsetting positive factors" as "particularly important in the first quarter." Late payments are still seen as partly due to last year's Gulf Coast hurricanes. If you remove the hurricane impact from the mortgage survey, the delinquency rate for the first quarter falls to 4.31%. The survey revealed that the percentage of mortgages starting the foreclosure process in the first quarter of 2006 was down to 0.41%. In the fourth quarter, there was a foreclosure starting rate of 0.42%. Higher fuel rates and interest rates are still expected to impact the ability of homeowners to maintain their mortgage responsibilities. With interest rates continuing a slow and steady rise, many borrowers will be facing higher monthly costs. "Additional modest increases in delinquency and foreclosure rates are likely in the quarters ahead," Duncan said. |
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