The movement to reform credit card practices is gaining speed as the White House and Congress target punishing fee practices they say are contributing to a growing number of Americans’ financial distress.

Banks say that higher funding costs, along with surging loan delinquencies and defaults, have forced them to reassess credit card risk.

When banks change credit card rates, consumers are often given the option of opting out, meaning they can pay off the debt at the same interest rate as long as they don’t make any new purchases. But if the bank raises rates because of a late payment, the consumer generally doesn’t have the option of refusing the higher rate.

Delinquencies on consumer loans continued to rise at the end of the year, according to data released Thursday by the American Bankers Association.

The banking group said the delinquency rate during the fourth quarter of 2008 across multiple consumer loans increased to 3.22%. It is the highest delinquency rate since the ABA began tracking the data in the 1970s. The delinquency rate was 2.90% during the third quarter.

The FHA became the main source of home loans to borrowers with poor credit and low down payments after the subprime lending market’s collapse. It allows borrowers to take out home loans with a down payments of as low as 3.5%, compared with 20% for a typical loan that doesn’t require mortgage insurance.

FHA loans are made through by banks, insured by the government and sold as mortgage backed securities by Ginnie Mae, the government’s mortgage finance agency. The FHA currently backs around a third of new home loans, up from about 3% in 2006.

Rates on conforming mortgages fell again this week, with the 30-year fixed-rate mortgage hitting a record low of 4.78% for the week ending April 2, according to Freddie Mac’s weekly survey results released Thursday.

30-year fixed-rate, 15-year fixed-rate and 5-year ARM hit record lows

The 30-year fixed-rate mortgage averaged 4.85% last week, and 5.88% a year ago. This week, it’s at its lowest level since the survey began in 1971.

Rates on 15-year fixed-rate mortgages also hit a record low, averaging 4.52% this week. The mortgage averaged 4.58% last week and 5.42% a year ago. It hasn’t been lower since Freddie Mac began tracking the mortgage in 1991.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 4.92%, another record low; Freddie Mac has tracked this mortgage since 2005. The ARM averaged 4.96% last week and 5.59% a year ago.