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Late mortgage payments up in third quarter, thanks to hurricane

Updated:
WASHINGTON (AP) _ Late mortgage payments jumped sharply in the third quarter as Hurricane Katrina wreaked havoc on Gulf Coast communities.

The percentage of mortgage payments that were 30 or more days past due for all loans surveyed climbed to 4.44 percent in the July-to-September quarter, the Mortgage Bankers Association reported Wednesday in its quarterly survey of mortgage conditions.


That was up considerably from the prior quarter's 4.34 percent delinquency rate and was the highest registered in a year.

The association's survey covers 40.7 million loans.

``Hurricane Katrina was the largest natural disaster this country has faced in the last few generations and obviously has had a major effect on the local housing markets in Louisiana and Mississippi,'' said Doug Duncan, the association's chief economist.

If Katrina had bypassed the United States, the third quarter's delinquency rate would have dipped to 4.21 percent, showing an improvement from the prior quarter, the association said.

The impact of Katrina and to some extent the two other Gulf Coast hurricanes, Rita and Wilma, will likely push up the percentage of late mortgage payments and push up foreclosures rates for at least the next few quarters, the association said.

Meanwhile, the percentage of mortgages that started the foreclosure process in the third quarter rose to 0.41 percent, from 0.39 percent in the second quarter.

Besides any lingering effects of the hurricanes, rising mortgage rates and high home heating bills may stretch some households' budgets, making it difficult to pay their mortgages on time.

``It is likely that rising short-term rates will impact some borrowers with adjustable rates,'' Duncan said. ``In addition, natural gas prices have roughly doubled from where they were this time last year. That and the higher costs of home heating oil are driving up home bills this winter and will likely strain the ability of some borrowers to make their mortgage payments.''

The Federal Reserve on Tuesday boosted short-term interest rates to their highest point in 4 1/2 years. It marked the 13th consecutive rate increase aimed at keeping inflation under control. The Fed's action influences a variety of interest rates for consumers and businesses.
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