Home loan payers catch up

The number of Maryland homeowners who have fallen behind on their mortgage payments by at least 30 days fell to the lowest level in more than a decade during the first three months of the year as the economy grew stronger and interest rates declined.

During the first quarter, 3.89 percent of loans were past due in Maryland, down from 5.2 percent during the final three months of last year, according to data released last week by the Mortgage Bankers Association. Last quarter's rate was the lowest since 1993, when it reached 3.87 percent.


Nationally, delinquency rates also decreased, falling to a seasonally adjusted rate of 4.33 percent during the first quarter, down from 4.49 percent during the fourth quarter.

The number of homes in foreclosure at the end of the first quarter was 1.27 percent nationwide, down from 1.29 percent during the last three months of 2003.


The Maryland foreclosure inventory percentage at the end of the first quarter fell to 1.13 percent from 1.17 percent during the final three months of last year.

"An expectation of strong job growth for the rest of the year and continued strength in the housing market bodes well for lower delinquency and foreclosure rates in the upcoming quarters," said Douglas Duncan, the bankers association's chief economist and senior vice president.

Mortgage interest rates remained below 6 percent for much of the first quarter but have been rising since March. The rate for a 30-year-fixed mortgage stands at 6.32 percent. A number of economists say they expect the 30-year rate to be closer to 7 percent by the end of the year.

The higher interest rates and rising energy prices have some local housing advocates worried that foreclosures will increase in coming months.

Because housing prices have been growing by double-digit percentages and personal income growth has not kept pace, many real estate experts fear that too many shoppers might hurry to buy in an effort to beat rising interest rates.

Becky Sherblom, executive director of the Maryland Center for Community Development, a nonprofit housing group in Baltimore, said some buyers might quickly find themselves overextended and unable to remain current with their mortgage payments as other costs rise.

"There is a real fear that people are getting in over their heads, trying to get in while interest rates are low," she said.

"Unless people's incomes start to increase at the same growth level as the housing prices, the problem is only going to get worse in the near future."