Private mortgage insurance, a means of protecting lenders against homeowner defaults, rose in April at its fastest pace this decade.

The amount of insurance outstanding rose 11.7 percent to $696.4 billion from a year earlier, the Mortgage Insurance Companies of America, a Washington-based trade group, said in a statement today. Private mortgage insurance is often required of borrowers who can't make a down payment of at least 20 percent and don't take out secondary loans to cover the purchase costs.

When lenders make borrowers take out mortgage insurance or purchase it themselves, it makes the loans "more attractive in the secondary market than uninsured loans," Steve Stelmach and Paul Miller, analysts at Arlington, Va.-based Friedman, Billings, Ramsey & Co., wrote in a report today.

Congress this year made mortgage-insurance premiums tax deductible for the first time. The change, which applies only to new loans, affected homeowners making up to $110,000.

About 161,000 consumers took out new loans with private mortgage insurance last month, or 68 percent more than in April 2006, the Mortgage Insurance Companies of America said. The share of delinquent loans whose borrowers have caught up on payments versus the number in default fell to 79.6 percent, from 92.3 percent in March and 98 percent a year earlier.

Data from the group reflects new and existing business at six of the seven U.S. mortgage insurers.