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Late-payment Rate On Mortgages Declined In 3Q

ALEX VEIGA

LOS ANGELES (AP) â¿¿ U.S. homeowners are doing a better job of keeping up with their mortgage payments, aided by an improving housing market and low interest rates that are making it easier to refinance.

The percentage of mortgage holders at least two months behind on their payments fell in the third quarter to 5.41 percent, the lowest point in more than three years, credit reporting agency TransUnion said Tuesday.

The rate was down from 5.49 percent in the second quarter and was nearly 8 percent below the 5.88 percent rate in the third quarter last year, the company said.

The mortgage delinquency rate hasn't been this low since the first quarter of 2009. Still, it remains well above the 1 percent to 2 percent average historical range, an indication that many homeowners still are struggling to make their payments.

Many homeowners changed the way they prioritize their financial obligations after the value of their homes plummeted with the housing crash. That has yet to change.

"People used to pay their mortgage first, and now they pay their auto and their credit cards before their mortgage," said Tim Martin, group vice president of U.S. housing for TransUnion. "We think that's probably still in place."

Even so, some homeowners are benefiting from the gradual turnaround in housing this year.

U.S. home prices jumped 5 percent in September compared with a year ago, the largest year-over-year increase since July 2006, according to data provider CoreLogic.

Higher prices help bring down the number of homeowners who owe more on their mortgages than their homes are worth, potentially making it easier for them to lower their monthly payments by refinancing.

And interest rates remain near record lows, making it possible for more homeowners to qualify for refinancing. The average rate on a 30-year mortgage was 3.40 percent last week and has been below 4 percent all year.

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