updated 12/9/2003 6:27:14 PM ET 2003-12-09T23:27:14

Fewer homeowners were behind on their mortgages payments in the last quarter as an improving economy helped to take pressure off household budgets.

The seasonally adjusted percentage of mortgage payments 30 or more days past due for all home loans dipped to a three-year low of 4.28 percent in the July-to-September quarter, down sharply from 4.62 percent in the previous quarter, the Mortgage Bankers Association of America reported Tuesday in its quarterly survey. The survey covers roughly 35 million mortgage loans.

The third quarter's delinquency rate was the lowest since a rate of 3.98 percent registered in the third quarter of 2000, the association said.

The economy grew at a blistering 8.2 percent annual rate in the third quarter, the strongest performance in nearly two decades. Stronger economic growth also helped the nation's payrolls grow slightly during the quarter.

Economists expect the economy slowed to a growth rate of around 4 percent in the current quarter, which would still mark a solid showing.

"With the expectation of continued strong economic growth through the next several quarters, job growth should continue and accelerate. This, in turn, is likely to give support to the downward trend in the delinquency rate, taking foreclosures lower as well," said Doug Duncan, the association's chief economist.

The percentage of mortgages that started the foreclosure process in the third quarter rose to 0.38 percent from 0.32 percent in the second quarter.

Duncan said foreclosures typically lag behind delinquencies by a quarter or two. During the first quarter of this year, the economy was struggling, weighed down by uncertainties related to the Iraq war.

The share of home loans in the foreclosure process, meanwhile, held steady at 1.12 percent in the third quarter, unchanged from the previous quarter.

The housing market _ powered by low mortgage rates _ has been an important source of support for the economy.

Rates on benchmark 30-year mortgages slid to 5.21 percent, the lowest level in more than four decades, in the middle of June. Since then, rates on these benchmark mortgages have bounced up and down. Last week, they averaged 6.02 percent. Even with the gyration in rates, home sales are expected to hit record highs this year.

Copyright 2003 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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