Mortgage Delinquency Rate Falls

The percentage of U.S. and California homeowners who were late making payments on their mortgages fell in the first quarter as incomes rose and jobs were more plentiful.

The seasonally adjusted national delinquency rate, the share of payments more than 30 days late, fell to 4.31% from 4.38% in the fourth quarter of 2004, the Washington-based Mortgage Bankers Assn. said in a report Tuesday.

In California, the delinquency rate fell to 1.82%, down from 2.04% in the previous quarter and the lowest since at least 1979, the first year of record keeping.

A rise in household incomes and an improvement in the labor market made it easier for Americans to pay their mortgages and gave some the chance to refinance at better terms, the association’s chief economist, Doug Duncan, said during a conference call. Lenders don’t give home loans to applicants without jobs.

“There is still a fairly high level of refinancing going on,” Duncan said during the call. “A number of those are cash-out refis,” which allow people to extract home equity to pay off debt and bring their household accounts current, he said.

In the first quarter, refinancings reached $275 billion, the highest since the second quarter of 2004, when the total was $393 billion, according to the association’s data. Almost half of the mortgage transactions in the first quarter were refinances, Duncan said.

“Consumers are very smart about optimizing their situations, and that has been a contributing factor” to the decline in the delinquency rate, he said.

Nationally, the percentage of loans entering foreclosure fell to 0.42% from 0.46%. In California, that percentage was 0.15%, the same as in the previous quarter.

The U.S. economy added an average of 180,000 jobs each month during the first quarter, Duncan said. The median family income grew to $56,323 in the period from $54,527 a year earlier, according to the National Assn. of Realtors.