Foreclosures drop

Utah's foreclosure rate has dropped to its lowest point in nearly eight years, and 30 states now post higher rates than Utah, according to a new report.

For the three months ended June 30, the percent of mortgage loans in foreclosure in Utah fell to 0.74 percent, down from 1.18 percent in the same quarter of 2005, according to the Mortgage Bankers Association's delinquency survey.

The last time Utah's foreclosure rate was lower was in the fourth quarter of 1998, when the rate was at 0.70 percent.

"In this environment it's actually surprising that there are that many foreclosures occurring," said Kelly Matthews, executive vice president and economist at Wells Fargo in Salt Lake City. "There just isn't any indication that we've started on the downside of the housing market yet."

Nationally, the percent of loans in foreclosure in this year's second quarter was 0.99 percent, down from 1 percent in the same period of 2005. Ohio had the highest foreclosure rate in the second quarter at 3.12 percent. Hawaii had the lowest at 0.22 percent.

Utah's delinquency rate — mortgage loans 30 days or more past due — declined to 3.56 percent in the second quarter from 4.25 percent during the same quarter in 2005. Nationally, the delinquency rate in the second quarter increased to 4.37 percent from 4.30 percent in the same quarter in 2005.

"Going forward we expect to see further slowing in the economy and the housing market," said Doug Duncan, MBA's chief economist and senior vice president. "As a result we will see modest increases in delinquency and foreclosure rates in the quarters ahead."

Here in Utah, rising housing values and strong job growth are the primary drivers behind falling foreclosure rates, Matthews said.

Utah ranks No. 10 nationally in house-price appreciation, with prices rising an average 15.17 percent in this year's second quarter compared to the same quarter in 2005, according to data released last week by the U.S. Office of Federal Housing Enterprise Oversight.

Duncan said recent actions by the Federal Open Market Committee in raising the federal funds rate from 4.75 to 5.25 percent in the second quarter are partly responsible for the rise in overall mortgage delinquencies, particularly for adjustable rate mortgages, which account for one-fourth of all first-lien mortgage loans in the United States.

"That tells you that those households will see some adjustments," Duncan said, "unless they refinance into a fixed-rate product."