NEW YORK (CNNMoneycom) -- Faced with higher mortgage rates and deteriorating housing markets, more Americans are having trouble paying off their mortgages this year, according to the latest quarterly report on delinquencies from the Mortgage Bankers Association released Wednesday.

The report examined the delinquency rate - the proportion of borrowers at least 30 days late with a payment - for all mortgages held on residential properties of one to four units.

It revealed that though the overall rate in the second quarter ticked up only slightly, the picture was worse for adjustable rate mortgages, which constitute about 25 percent of all loans.

The delinquency rate for ARMs, climbed 0.51 percentage points compared with the second quarter of 2005, to 2.70 percent. That represents an increase of 23 percent in the number of borrowers in this category who are falling behind.

The delinquency rate for subprime ARMs climbed 2.20 percentage points to 12.24 percent, a 22 percent rise.

Borrowers with fixed rate loans, who are unexposed to interest rate rises, fared better. The delinquency rate for prime, fixed-rate loans actually dropped slightly (0.02 percentage point) from the second quarter of 2005.

Regionally, outside of Katrina hit areas, some of the worst performing states are in the Midwest. Michigan, Ohio and Indiana all have delinquency rates above 6 percent.

Some economists think delinquency problems will deepen. Dean Baker, of the Center for Economic and Policy Research predicted the rise in defaults last July in a report entitled "The Housing Bubble Fact Sheet."

In it, he argued that a housing bubble burst could cause record mortgage defaults because total home equity compared with home value is very low. That despite the huge run-up in home prices that has added tremendously and directly to equity.

The problem, according to Baker, is that many homeowners have borrowed against this new equity and when home prices fall, they may find themselves "underwater," with the amount of their mortgage higher than the value of their house. That would mean more of them would walk away, simply default on their mortgage and turn their house over to the mortgage holder.

• Foreclosure rates are surging.

• More than 250 foreclosed homes are on auction in Michigan.

• Sellers face more challenging markets.