The percentage of delinquent Nevada home loans declined slightly in the last three months of 2005, compared with the same period a year ago but increased when compared with the previous quarter in 2005, a survey released Thursday by the Mortgage Bankers Association shows.
The percentage of past due residential mortgage loans registered 3.01 percent in the last quarter of 2005, down from 3.22 percent at the same time in the prior year. Still, that number was higher than the 2.67 percent in the third quarter of 2005.
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Nevada's past due loan percentages were far below the 4.7 percent nationally, according to the trade group. Nationally, past due loan increased from 4.38 percent at the same time in 2004 and from 4.44 percent in September.
Although the housing market was strong last year, some early indications of softening occurred in the fourth quarter, said Doug Duncan, the association's chief economist.
Homeowners in Louisiana and Mississippi, two areas slammed by Hurricane Katrina, are struggling to stay current with mortgage loans, he said. But the past-due loan trends in those Gulf Coast states didn't totally account for the uptick in mortgage delinquencies nationally, he said.
"The results of the two states simply magnifies the trend in the national data," he said.
Some of the increase in late loan payments stems from the age of mortgage loans, he said. Many new mortgage loans were made in recent years, and Duncan explained that the probability of late mortgage payments typically peaks in the third to fifth year of a mortgage, he said, because in part borrowers are in better shape financially when they qualify for the loan.
Also interest rates are starting to increase, which can result in higher payments for homeowners with adjustable- rate mortgages.
"We expect to see a modest rise in delinquencies in the quarters ahead," Duncan said.
Duncan said his projections will be too low if there's a major loss of jobs nationally or a dramatic increase in interest rates.
He related the mortgage loan market to the economy.
"We expect the economy to grow in 2006 by 3.5 percent (in gross domestic product)," he said. He anticipates that new jobs nationally will expand by 190,000 monthly this year, noting that job loss was a key cause of mortgage delinquencies.
"The last thing a household will let go is the mortgage," he said, referring to credit card and other debt.
So-called subprime mortgage loans, those made to borrowers with low credit ratings, have continued to climb since the third quarter and a year ago. But the percentage of past due subprime loans in Nevada was 6.87 percent, well below the national average of 11.63 percent in the latest period. Only 5.09 percent of subprime loans were past due a year earlier in Nevada, compared with 9.88 percent nationally.
About one-third of 1 percent of all residential mortgage loans in Nevada were in foreclosure at year's end, down from 0.47 percent at the end of 2004.
The association's quarterly survey covers 41.2 million loans.
