The growth rate of Alt-A loan delinquencies remains uncomfortably high, but defaults are beginning to moderate, a new industry survey shows.

The Alternative-A RMBS Performance Update report from Standard & Poor’s says that as of the July 2009 distribution date, total delinquencies were 27.49% for the 2005 vintage, 39.25% for the 2006 vintage, and 35.85% for the 2007 vintage.

“Although delinquencies continue to increase, there are signs that the pace of growth is starting to slow,” said the credit research study.

For the 2005 vintage, total delinquencies increased at a rate of 0.82% between June and July, but that’s quite a bit lower than the 2.34% average growth rate in the prior three months. Serious delinquencies ― defined as no payment for at least 90 days, plus foreclosures ― were 21.47% for the 2005 vintage. That’s an increase of 1.89% since the prior period, compared with a three-month average rate of +3.75%.

The 2006 vintage reported a 1.03% increase in total delinquencies in July, compared with a three-month average growth rate of +2.10%. Serious delinquencies were at 31.98%, an increase of 2.08% in the month.

Total delinquencies for the 2007 vintage were 1.88%, a rate that compares favorably with the three-month average of +3.39%. Serious delinquencies were at 28.59%, after increasing 3.51% in July. The monthly average in the prior three months was +5.32%.

“Cumulative losses have continued to increase for these vintages as well,” the report said.

The report for the July 2009 distribution date shows cumulative losses for the 2005, 2006, and 2007 vintages at +2.32%, +4.89%, and +3.66%, respectively. 

Compared with the last distribution statement, cumulative losses are up 11.01% for 2005, 10.63% for 2006, and 13.67% for 2007. 

“The continued large increases in cumulative losses reflect a rise in liquidations among Alt-A deals,” the S&PT report said. “The three-month average rates of increase were 11.89%, 13.11%, and 28.58% for 2005, 2006, and 2007, respectively.”