The number of Californians defaulting on their mortgage loans is rising rapidly, reflecting a listless housing market, figures released yesterday show.

Default notices jumped by 145 percent in the last three months of the year, accelerating a trend that began in late 2005 as home sales started to cool.

Analysts said the increase was not worrisome — yet. But if the number continues to escalate, it could drag down values in certain communities, they warned.

"So far, this isn't alarming," said John Karevoll, chief analyst for DataQuick Information Systems, which released the figures. "But if they keep going up at this rate, it could get nasty fast."

Areas that are most vulnerable include the Inland Empire and Central Valley, both of which drew throngs of first-time buyers even as the boom was ending.

With relatively little equity in their property, these owners are the most at risk of losing their homes if they can't keep up with the payments.

Default notices are the initial step in the foreclosure process. In the last three months of the year, lenders warned 37,273 borrowers across the state that they were at risk of foreclosure, a 145 percent increase over the same period a year before, DataQuick said.

It was the largest number of default notices in any three-month period since 1998.

Foreclosures are less frequent, but are also on the rise. There were 6,078 in the last quarter of 2006, up from 874 a year earlier.

"I really don't see any distress out there," said Chris Comer, a mortgage broker with Pacific Capital in San Marcos.

"Most people getting notices of default are figuring out ways to get those mortgages current by any means possible, so they're not kicked out in the street," Comer said.

Lenders have invented all sorts of newfangled loans, many of which reset into higher rates after a fixed period.

The ability of borrowers to repay these new loans, particularly in a weak market, is untested.

"People are living on the edge, and they can't help it with the price of houses," said Barbara Swist, a broker in Costa Mesa. "They have good jobs but they bought over their heads, buying into the American dream."

That's also the opinion of the Center for Responsible Lending, a nonprofit advocacy group based in North Carolina and Washington, D.C.

Last month the center issued a lengthy analysis explaining how millions of so-called sub-prime loans would soon turn bad.

Sub-prime loans are made at higher rates and more onerous terms to borrowers who don't qualify for lower cost "prime" mortgages.

Sub-prime foreclosures would increase the most, the authors concluded, in states that had strong appreciation. That would include New York, Virginia, Maryland and particularly California.

The borrowers most at risk are naturally those who bought most recently and are following the market down.

The center calculated that a quarter of sub-prime loans made in the Central Valley city of Merced last year would result in foreclosure, the highest rate in the country.

Eight other California cities, including Vallejo, Bakersfield, Fresno and Stockton, filled out the top 15.

That roughly parallels the new DataQuick numbers. The Central Valley, with about 6.5 million people, had 8,531 defaults and 1,646 foreclosures in the last three months of 2006.

Los Angeles County, with 10 million people, had fewer of both.

For the state as a whole, the Center for Responsible Lending projects a failure rate of 21.4 percent for 2006 sub-prime loans, a level exceeded only by Nevada and Washington, D.C.