The tightening mortgage market isn't expected to hurt real estate along the Wasatch Front, but it probably will be more difficult for entry-level buyers to afford a home.

Nationally, a spike in mortgage defaults has driven many lenders to bankruptcy or forced them to scramble to stay in business. The problems are centered around subprime loans, the industry term for mortgages granted to people with blemished credit.

In Utah, 9.4 percent of subprime loans were delinquent in the fourth quarter of 2006, according to the Mortgage Bankers Association -- lower than the national average of 14.3 percent. In some states that figure is higher than 20 percent, said Jim Wood of the University of Utah's Bureau of Economics and Business Research.

"I think it's a concern here, but I don't think that it's a crisis situation," he said.

It helps that Utah's housing market is still strong. The median sales price for a Utah County home was $213,200 in 2006, a 21.8 percent increase over the previous year. Wasatch Front home sales set a record in 2006 -- 30,000 homes sold at a value of $7 billion.

In other parts of the country, flat or declining home prices left borrowers owing more than their houses were worth.

The state's real estate picture should stay healthy, said Kevin Call of the Utah County Association of Realtors. Unemployment is low and more people are moving to the state, which will keep housing demand up.

It may be harder, however, to access some of the financing tools that subprime lenders used to offer mortgages to people who otherwise might not qualify.

"That's probably not a bad thing in the long run," Call said. "Those creative lending arrangements allowed people to buy homes, but not necessarily afford them."

As the housing boom heated up, lenders relaxed the requirements on subprime loans and offered a variety of financing options. Down payments weren't required. Buyers could pay just the interest on the loan, and many had adjustable rates that offered a low introductory payment that ballooned after a short period of time.

"People's monthly payment can almost double with these products," said Sharon Reuss, spokeswoman for the North Carolina-based Center for Responsible Lending. "It sets the borrower up to fail."

Still, the loans often worked as long as housing prices appreciated -- loan recipients had the option of refinancing or selling to get out of a tight spot. But in places where prices leveled off, people found themselves in the hole and unable to make their payments.

"There has been incredible appreciation in home prices, and now things are starting to flatten," Reuss said. "That's where a lot of the difficulty is coming in for borrowers."

This has happened in other real estate run-ups, said Scott Shelley, president of First Colony Mortgage in Orem.

"The banks got ahead of themselves. They always do," he said.

His company mostly avoids subprime lending, and the subprime loans they have made are "stable," he said.

"When the market gets really strong and housing prices are going up, there's a lot of froth in the market," he said. "Everybody starts to get too lenient.

"The bottom falls out and they're left holding these houses and these mortgages they never should've made. Eventually the piper has to be paid."

Shelley also predicted that the mortgage market fallout in Utah will be moderate, and that home valuations won't rise as fast as they have been.

They're not likely to go down, either, said Call, which will make it tough for people trying to enter the housing market. He noted that less than 10 percent of the available housing is priced under $200,000.

"There will be problems in the starter home market," he said. "We are facing a little bit of an affordability problem."

This story appeared in The Daily Herald on page D1.