Mortgage Delinquencies Rise

Late mortgage payments climbed to a 2 1/2 -year high in the final quarter of 2005 as Gulf Coast homeowners struggled with fallout from the hurricanes, and as lofty energy prices along with rising interest rates squeezed the budgets of others across the country.

The Mortgage Bankers Assn., in its quarterly mortgage survey, reported Thursday that 4.7% of all mortgage payments tracked were 30 or more days past due.

That was up from the previous quarter’s 4.44% delinquency rate and was the highest since the second quarter of 2003.

The association’s survey covers 41.2 million loans.

The growth in late mortgage payments was driven in large part by problems in the communities devastated by last year’s hurricanes, which have pushed up delinquency rates in Louisiana and Mississippi, the association said.

But other issues also arose.

“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 sub-prime 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 homeowners who hold adjustable-rate mortgages. Those who stretched financially to buy their homes and have such mortgages are more likely to feel the strain on their budgets from rising rates.

Sub-prime borrowers -- those with weaker credit records, who are considered higher risks -- also can face problems when rates rise and energy costs stay high.

If the effects of the hurricanes are removed from the mortgage survey, the fourth-quarter delinquency rate decreases to 4.55%, the association said.

The group’s survey also showed that the percentage of mortgages that started the foreclosure process edged up to 0.42% from 0.41% in the third quarter.

Even with the slight increase, the foreclosure figure is still considered low.