Mortgage Applications, Refinancings Rise
WASHINGTON -- The percentage of homeowners who were behind on mortgage payments in the first quarter of this year fell sharply as an improved economy and firmer job market took pressure off household budgets.
The Mortgage Bankers Association reported in its quarterly survey last week that the seasonally adjusted percentage of mortgage payments 30 or more days past due declined in the first quarter to 4.33 percent, down from 4.49 percent in the previous quarter. The first-quarter's performance marked the lowest delinquency rate since the second quarter of 2000, when the economy was flourishing and the recession was a year away.
The recovering economy picked up steam in this year's January-to-March quarter, growing at a solid 4.4 percent annual rate, and companies began to step up hiring. The economy added 595,000 jobs in the first three months of this year. Sizable gains in payrolls also were registered in April and May.
The percentage of mortgages that started the foreclosure process, however, edged up to 0.46 percent, from 0.45 percent in the fourth quarter. Foreclosures typically lag delinquencies by a quarter or two. In the third and fourth quarters of last year, the labor market was sluggish and still struggling to get back on firm footing.
"An expectation of strong job growth for the rest of the year and continued strength in the housing market bodes well for lower delinquency and foreclosure rates in the upcoming quarters," said Doug Duncan, the association's chief economist.
The association's survey covers roughly 37 million mortgage loans.
With the economy growing smartly, mortgage rates have been rising.
The average rate on a 30-year mortgage climbed to 6.30 percent last week, according to Freddie Mac. Rates on 30-year mortgages could rise to 6.9 percent by the end of this year, according to some economists' estimates. Even so, housing experts predict record or near-record home sales for all of this year.