3rd-Quarter Mortgage Delinquencies Up

U.S. mortgage delinquencies rose in the third quarter, reflecting a slowing economy and financial obligations that often hit residential property owners a few years after they buy, the Mortgage Bankers Assn. said Tuesday.

The percentage of delinquent one- to four-unit residential property loans rose 0.22 percentage point to 4.04%, after rising 0.10 point to 3.82% in the previous quarter. The increases came after the delinquency rate fell to 3.72% in the first quarter, its lowest level since 1972, the trade group’s quarterly surveys stated.

Douglas Duncan, chief economist for the mortgage association, said delinquencies, so called when owners are behind at least one payment, tend to rise as maintenance and repair issues surface three to five years after people buy properties.

“We have a big amount [of loans] that are beginning to move into that range just at a time when the economy is slowing,” he said.

Reports showed last month that consumer confidence is at the lowest point in two years and the U.S. gross domestic product is expected to slow at the beginning of this year to an annual rate of 2.2%.

Sales of previously owned homes probably will fall this year to 4.9 million from about 5.0 million in 2000 and a record 5.2 million in 1999, the National Assn. of Realtors said.

In 1997, the mortgage industry lent $595 billion for home purchases. In 1998 that figure rose to $750 billion, and in 1999 it hit a record $848 billion, Duncan said.

The amount dipped to about $829 billion last year, reflecting the start of the real estate market slowdown and higher interest rates, he said.

The rise in delinquency rates could be tempered if the Federal Reserve acts as expected to cut overnight lending rates early this year, Duncan said, adding that the resulting drop in mortgage rates would lead to an increase in the number of property owners refinancing their loans.