After watching residential loan delinquencies rise for six months, the Mortgage Bankers Association has acknowledged the nine-year decline in late payments probably has come to an end.
"It's realistic to think the decline in delinquency rates is probably over," association Executive Vice President Warren Lasko said at a news briefing this week.The latest survey by the mortgage bankers found the seasonally adjusted delinquency rate for loans on one- to four-unit residential properties was 4.21 percent from April through June, up from 4.12 percent in the previous three months and 4.09 percent in the final quarter of 1993.
Although the rate was unchanged in the North Central region, it increased in the nation's other three regions.
The percentage of past-due loans reached a cyclical peak of 6.08 percent in the first three months of 1985 and then began a gradual decline that ended last December.
When an increase was posted in the first quarter, Lasko maintained, "The long-term trend is clearly down." No longer.
Lasko attributed much of the second-quarter increase to "the natural aging of mortgage loans being serviced." He explained that loans that originated during the refinancing boom from mid-1991 to early 1992 are now nearly three years old.
Historically, that is the beginning of the period in the life of a loan when problems are most like-ly to occur, he said. If they get to the seventh year without any problems, they probably will not develop any.
Lasko said rising interest rates resulting in increases in adjustable rate mortgage costs could add to the delinquency rate, although it probably was too early for the added costs to have boosted late payments during the April-June period.
"It's something to look for in the future," he said.
Other factors that could worsen the delinquency situation include slower economic growth and rising interest rates, the association said.
The mortgage bankers reported the delinquency rate rose for all three loan types in the second quarter - by 9 basis points to 2.71 percent for conventional loans, 11 basis points to 6.40 percent for VA loans and 14 basis points to 7.39 percent for FHA loans.
A basis point is one-hundredth of one percent.
The association said the increase in delinquencies was accompanied by a rise in foreclosure rates. The percentage of foreclosures inched up to 0.35 percent from 0.31 percent, and the percentage of loans in the foreclosure process advanced to 1.03 percent from 0.94 percent.
Regionally, the delinquency rate was unchanged at 3.69 percent in the North Central region but rose elsewhere - by 26 basis points to 4.41 percent in the Northeast, 19 basis points to 3.70 percent in the West and 5 basis points to 3.71 percent in the South.
The survey covered 18.3 million loans, about one-third of all residential mortgages outstanding.