WASHINGTON (AP) — Home foreclosures soared to an all-time high in the final three months of 2007 and probably will keep rising, evidence of homeowners' suffering and the economic danger from the meltdown.

The Mortgage Bankers Association said yesterday the proportion of all mortgages that slipped into foreclosure set a record, 0.83 percent, from October through December. The previous high, 0.78 percent, came in the July-through-September period.

"Clearly it's the worst it's been," the association's chief economist, Doug Duncan, said in an interview with The Associated Press.

At the same time, more homeowners fell behind on their monthly payments.

The delinquency rate — when payments are at least 30 days past due — for all mortgages climbed to 5.82 percent, the highest since 1985. The rate was 5.59 percent in the third quarter last year.

Homeowners with tarnished credit who have sub-prime adjustable-rate loans took the hardest hits. Foreclosures and late payments for these borrowers swelled to all-time highs, too, in the fourth quarter.

The portion of sub-prime adjustable-rate mortgages that entered the foreclosure process set a record, 5.29 percent. The previous high, 4.72 percent, came only three months earlier.

Late payments skyrocketed to a record 20.02 percent, compared with the mark of 18.81 percent from July through September.

The association's quarterly snapshot of the mortgage market covers almost 46 million home loans.

"Mortgage credit quality is deteriorating fast," said Mike Larson, a real-estate analyst at Weiss Research.

Already there are fears the country is teetering on the edge of a recession, if not in one now.

The wave of foreclosures threatens to depress the housing market even more. The homes people are forced from add to the glut of unsold ones on the market. That means greater cutbacks by homebuilders, affecting economic activity.

Credit is harder to get, thwarting would-be buyers and aggravating problems in the housing market.

President Bush "understands that it's traumatising for people who are at risk of losing their home," press secretary Dana Perino said. "There is a concern that there's a large amount of people who are facing foreclosure," she said. "We do not believe that the American taxpayer should be bailing out lenders or borrowers, but what we do believe is that we can help try to bring them together."

For many with sub-prime loans, initially low interest rates have adjusted much higher. With home values dragged down, many borrowers were left with mortgages that eclipsed the value of their homes.

"Declining home prices are clearly the driving factor behind foreclosures, but the reasons and magnitude of the declines differ from state to state," Duncan said.

In a separate report, Americans' percentage of equity in their homes has fallen below 50 percent for the first time on record since 1945, the Federal Reserve said.

Homeowners' percentage of equity slipped to 49.6 percent in the second quarter of 2007 and reached 47.9 percent in the fourth quarter. It was the first time that homeowners' debt on their houses exceeds their equity since the Fed started tracking the data in 1945.

Even with relief efforts under way by industry and the government, Federal Reserve chairman Ben Bernanke said this week that foreclosures and late payments probably will rise "for a while longer". Duncan agreed.

Bernanke's recommendation for lenders to reduce the amount owed on troubled home loans goes beyond the position staked out by the Bush administration. The Fed chief, however, did not go as far as to endorse some proposals embraced by Democrats on Capitol Hill.

One ideas promoted by the administration would allow some homeowners with certain subprime home loans to freeze their interest rate for five years.

California and Florida represent a disproportionate share of the new foreclosures. The two states accounted for 30 percent of mortgages starting the foreclosure process, the association said. "In states like California, Florida, Nevada and Arizona, overbuilding of new homes created a surplus that will take some time to work through," Duncan said. That glut has pushed down house prices, he said.

Bernanke said neighbourhoods suffer, too, when foreclosures cluster.