Utah's mortgage foreclosure rate has dropped to its lowest point in nearly seven years, and 26 other states now post higher rates than Utah, according to a new report.

For the three months ended March 31, the percent of mortgage loans in foreclosure in Utah fell to 0.87 percent, down from 1.33 percent in the same quarter of 2005, according to the Mortgage Bankers Association's delinquency survey. The last time Utah's foreclosure rate was that low was in the fourth quarter of 1999, when the rate also was at 0.87 percent.

Utah's foreclosure rate reached an all-time high in the first quarter of 2002 at 2.25 percent.

Nationally, the foreclosure rate in this year's first quarter was 0.98 percent, down from 1.08 percent in the same period of 2005.

Ohio had the highest foreclosure rate in this year's first quarter at 3.27 percent. California and Hawaii tied for the lowest rate at 0.23 percent.

Nearly two years ago, Utah ranked among the 10 states with the highest foreclosure rates. Since then, the state's strong job growth and rising real estate values have sent foreclosures tumbling.

At a job growth rate of 4.5 percent, nearly 52,000 new jobs were created in Utah in the 12 months ended May 31, according to a report released this month by the Utah Department of Workforce Services. Utah's job growth rate ranks among the top five states nationwide.

Doug Duncan, MBA's chief economist and senior vice president, said the most important factor in the performance of the housing market is employment.

"As long as there continues to be strength in employment growth, we believe that will counteract some of the forces that tend to drive delinquencies up," Duncan said. "The (U.S.) housing market, as you know, is slowing, and that will be a contributing factor to the number (of delinquencies) going forward. ... As house-price appreciation slows, that will be less of a tool for solving delinquency and foreclosure problems."

Duncan said states with a high proportion of their labor force in manufacturing, like those in the Midwest, showed a rise in foreclosures because of sweeping layoffs. The East North Central region, which includes Illinois, Indiana, Michigan, Ohio and Wisconsin, showed the highest percent of loans in foreclosure in the first quarter, the report noted.

Utah's delinquency rate — mortgage loans 30 days or more past due — declined to 3.29 percent in the first quarter from 4 percent during the same quarter in 2005.

Louisiana and Mississippi are still reeling from late mortgage payments related to last year's hurricanes. Delinquency rates in those states are still in double-digit territory at 13.73 percent and 12.86 percent, respectively.

Duncan said he expected to see higher mortgage interest rates going forward, along with slower U.S. employment growth, home sales and house-price appreciation. Still, he said, 34 percent of all U.S. homeowners hold no mortgage and 48 percent of homeowners carry fixed-rate mortgages. That leaves just 18 percent of homeowners carrying adjustable-rate mortgages, which are sensitive to rises in interest rates.

The MBA survey covers 41.3 million first lien mortgages on one- to four-unit residential properties.

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