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WASHINGTON, DC-The Mortgage Bankers Association of America has released its second quarter national delinquency survey and the rate is 4.63%, the highest it has been since the second quarter of 1992, when it was 4.7%. The delinquency rate reflects the percentage of building owners paying their mortgages late on loans for one- to four-unit residential properties. The 4.63% rate is up 26 basis points from the first quarter. The percentage of loans on which foreclosure was started during the quarter went up 5 basis points to .36%, while the percentage of loans in the foreclosure process at the end of the quarter rose 1 basis point to .91%.

This data came as no surprise to the association. “We expected that we would see delinquency going up because the survey is a lagging indicator,” MBAA spokesman Dave Warner told GlobeSt.com. “While it was weakening in the second quarter, those numbers aren’t going to show up until the third quarter or fourth quarter,” Warner said. MBAA chief economist Douglas Duncan, Warner said, believes the rate will rise for the next quarter or two.

However, rather than overreacting, Warner cautioned that some perspective is in order. The rate is at it highest level since the second quarter of 1992, but for much of the 1980s and the early 1990s, the rate was over 5%, he said. Moreover, mortgage bankers tend to make loans to customers during good times that they might not otherwise make in tougher economic conditions.

“If you have 10 people and one loan goes bad, you’re talking 10%, [but] if you have 20 people, you’re talking about 5%,” said Warner, so now is a time things may begin to slow. And the delinquency rate is merely reflecting the strong demand. The weekly survey that MBAA conducts demonstrates that demand has been steadily increasing for mortgage loans, and that refinancings are a large part of that demand, because of low interest rates.

Warner compared this year with 1998, when there were record originations, a lot of refinancings, and a delinquency rate that was moving up.

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