(Bloomberg News) The U.S. mortgage delinquency rate declined in the first quarter to the lowest level since 2008 as an improving job market helped more borrowers pay their bills and tighter lending standards resulted in fewer defaults.

The share of home loans at least 30 days late dropped to 7.4 percent from 7.58 percent in the previous three months, according to a report today from the Mortgage Bankers Association. The rate peaked at 10.1 percent in the first quarter of 2010 and was last lower in the third quarter of 2008, when it was 6.99 percent.

"Delinquencies are clearly continuing to improve," Michael Fratantoni, the group's vice president of research and economics, said in a statement. "Newer delinquencies, loans one payment past due as of March 31, are down to the lowest level since the middle of 2007, indicating fewer new problems we will need to deal with in the future."

Falling delinquencies may help limit foreclosures and solidify a recovery in the housing market as low interest rates combine with decreased prices to stimulate demand. Housing affordability reached a new high in the first quarter and sales of previously owned homes rose 5.3 percent from a year earlier, data from the National Association of Realtors show.

Housing Starts

Housing starts increased 2.6 percent to an annual pace of 717,000 in April, beating analysts' estimates and adding to evidence that the real estate market is strengthening, according to Commerce Department data reported today.

The U.S. jobless rate fell in April to 8.1 percent, the lowest since January 2009. Rates for 30-year fixed loans declined to a record 3.83 percent in the week ended May 10, according to Freddie Mac, the McLean, Virginia-based mortgage- finance company.

The largest share of troubled loans were originated in 2005 to 2007, according to the bankers group. Stricter lending standards and deflated prices for borrowers who got mortgages after the housing market collapsed account for better performance of loans issued since 2008, said Jay Brinkmann, chief economist for the association.

Most borrowers experience late payments in the first three or four years of a loan, so the worst of the foreclosure crisis probably has passed, he said.

"We're back to our long-term trend," Brinkmann said in a telephone interview today. "That's an indication things have changed."

Longer Foreclosures

Loans more than 90 days overdue -- the point at which lenders usually begin the process of seizing a property -- fell to 3.06 percent on a seasonally adjusted basis from 3.11 percent in the first quarter and 3.62 percent a year earlier, according to the mortgage bankers. The share of homes that had received a foreclosure notice and hadn't been seized by banks increased to 4.39 percent, up 1 basis point, or 0.01 percentage point, from the previous quarter, the trade group reported.