The delinquency rate on all mortgage debt outstanding jumped to 2.87 percent in the first quarter from 2.51 percent in the linked quarter, with credit problems “evident nearly everywhere across the country,” according to a report by Moody’s Economy.com Inc.

“Mortgage credit conditions are rapidly eroding,” said Mark Zandi, Moody’s Economy.com chief economist and cofounder, in the report. “All indications are that [delinquency and default rates] will continue to rise measurably into 2008. This poses a threat to the sanguine consensus view that the economy will experience only a modest slowdown this year.”

The delinquency rate is up from its low of 2.03 percent in the fourth quarter 2005 and the previous high in the fourth quarter 2001, “when the economy was struggling with recession and the immediate fallout from the 9/11 terrorist attacks,” the report said.

Along with delinquency rates up sharply across all delinquency levels, including 30, 60, 90, and 120 days, default rates hit a record — a “stunning” 1.16 million defaults at an annualized pace in the first quarter of 2007, compared to less than 900,000 defaults last year, according to the report based on data from CreditForecast.com, a joint venture between Moody’s Economy.com and Equifax.

The top state delinquency in the first quarter belonged to Mississippi, Texas and Michigan, which respectively had rates of 4.85 percent, 4.09 percent and 4.06 percent, according to the data. Nonetheless, the report cited that, in addition to Michigan, delinquency rates are highest in Ohio, Indiana and Tennessee, “where the auto industry is rationalizing, severely disrupting incomes.”

Over the past year, from the all-time low at the end of 2005, the largest delinquency increases occurred in Nevada — up almost 2 percent to 3.66 percent, Florida, California, and much of the Northeast corridor.

Out of 250 metro areas and non-metro areas, the highest delinquency rate — 6.19 percent — in the first quarter was in the Detroit-Livonia-Dearborn, Mich., area, followed by 6.01 percent and 5.63 percent in the Texas areas of Brownsville-Harlingen and Corpus Christi, respectively.

Over the past year, delinquency has increased in 200 of the areas. The data showed three cities in California had the largest upturns, beginning with Modesto — 3.88 percent to 5.62 percent, followed by Stockton and Merced. In addition to California’s Central Valley, larger markets experiencing the most substantial weakening of credit reportedly included Boston, Las Vegas, Miami, Orlando, Riverside, Calif., San Diego and Washington, D.C.

Montana, New Mexico, North Dakota, South Carolina and Utah are amongst the few areas where credit quality is holding stable, with Albuquerque and Salt Lake City being the only large metros cited in the report as experiencing significantly lower delinquency rates.

Total mortgage debt outstanding is reportedly $8.4 trillion — representing another double-digit year-over-year gain in the first quarter and about double the amount five years ago.

In mid-2008, the delinquency rate is expected to peak near 3.5 percent, and about 1.3 million defaults will occur both this year and next, the report said.

Fast-eroding mortgage credit quality “is all the more meaningful given that it is occurring despite continued very robust mortgage borrowing” and it “has quickly become the most serious threat to the economic expansion,” according to the report.

Financial pressures cited for the “dour” outlook were the “extraordinarily aggressive” mortgage lending in 2005 and 2006 — which included 40 percent of purchase originations that were subprime, alt-A and prime jumbo interest-only and negative amortization loans; the first payment resets that most subprime loans originated in that period will face this year and next; further substantial house price declines; and weak job markets in certain areas of the country.

Furthermore, while passage of guidance requiring lenders to qualify adjustable-rate mortgage borrowers at the full-indexed interest rate, would “ultimately result in fewer credit problems, the impact this year would be to substantially increase them,” as many subprime borrowers struggling to stay current would not be able to refinance under the more restrictive guidelines.