The U.S. mortgage delinquency rate declined in the first quarter to the lowest level since 2008 as an improving job market and low interest rates helped more borrowers pay their bills.

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.

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.

Tighter Lending

The largest share of troubled loans were originated in 2005 to 2007, according to the bankers group. Tighter 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.

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.

Mortgage servicers have slowed the pace of foreclosures since the fourth quarter of 2010, when they faced allegations of using improper and fraudulent paperwork to repossess homes with delinquent mortgages. The five largest servicers, including Bank of America Corp. and JPMorgan Chase & Co., reached a $25 billion settlement with state and federal regulators in February.

Four states — Maryland, Delaware, New Jersey and Washington — had increases in the overdue rate for loans more than 90 days late. Foreclosure starts decreased in 41 states and the rate of loans in foreclosures fell in 22 states.