A major real estate financing group predicts that mortgage delinquencies, which dipped to an 18-year low late last year, will continue to shrink this year as the economy grows and interest rates fall.
According to a survey by the Mortgage Bankers Association of America, the delinquency rate fell dramatically to 4.24 percent during the October-December quarter.That was down 36 basis points from 4.60 percent during the July-October period and the lowest since it stood at 4.22 percent in the final quarter of 1974.
A basis point is one-hundredth of a percentage point.
Herbert B. Tasker, the association president, said the improvement means "clearly the economy is picking up; the employment situation is improving; there's been a small gain in personal incomes."
At the same time, mortgage rates have fallen to a 20-year low, prompting a new mortgage refinancings to lower monthly payments. Lower interest rates have reduced other debt payments.
Delinquencies had peaked recently at 6.07 percent in the first-quarter of 1985 and, after falling for several years, reached 5.26 percent in the second-quarter of 1991 as the economy began to emerge from the recession.
In the 1992 fourth-quarter, delinquency rates rose 20 basis points in the Northeast, to 4.87 percent.
But they fell elsewhere - down 30 basis points in the South, to 5.24 percent; 18 basis points in the Midwest, to 4.24 percent, and 12 basis points in the West, to 3.73 percent.