One out of eight U.S. households with a mortgage ended the first quarter late on loan payments or in the foreclosure process, in a crisis that will persist for at least another year until unemployment peaks, the Mortgage Bankers Association said on Thursday.

U.S. unemployment in April reached its highest rate in more than a quarter century and is still rising, helping propel mortgage delinquencies and foreclosures to record highs.

Such economic conditions drove up foreclosures of prime fixed-rate mortgages, which represented the largest share of new foreclosures for the first time since the rapid growth and the ensuing collapse of the subprime loan market.

"We clearly haven’t hit the top yet in terms of delinquencies or the bottom of the housing market," Jay Brinkmann, the group’s chief economist, said in an interview.

"The housing market depends on the employment situation," he said, "and we don’t expect employment to bottom out until the middle of next year so then normally housing would not recover until after employment recovers."

A record 12.07 percent of loans on one-to-four unit residences were at least one payment past due or in the foreclosure process in the first quarter, on a non-seasonally adjusted basis.

Foreclosure actions were started on an all-time high 1.37 percent of first mortgages in the quarter, a record increase from 1.08 percent the prior quarter.

The share of loans in the foreclosure process rose to a record 3.85 percent from 3.30 percent in the fourth quarter and 2.47 percent a year earlier.

California, Florida, Arizona, Nevada accounted for nearly half of the new foreclosure activity in the quarter, and half of the increase in prime fixed-rate foreclosure starts.

Those severely hit states, the biggest winners in the five-year housing boom earlier this decade, continue to worsen as recession overtakes problems spawned by lax lending standards.

"Every job loss, every divorce, every incident like that is going to be turning into a foreclosure because they are so far under water with the homes already," Brinkmann said.

When a house is "under water", it means the price has fallen below the size of the mortgage.

On a non-seasonally adjusted basis, the delinquency rate dipped to 8.22 percent from 8.63 percent.

The MBA noted that the late payment rate always declines in the first quarter due to seasonal factors, and said that after such adjustments, the rate jumped to a record 9.12 percent.