Customers opting to pay credit cards over mortgages

United States customer patterns in payment of debts have experienced a sea change since the recession, reports the Huffington Post. At one time, a home loan was paramount, considering it dealt with primary shelter. The flood of upside down mortgages has placed customers in the position of only being able to pay the smaller, higher-interest debt of charge cards. Source for this article – Consumers opting to pay credit cards over mortgages by MoneyBlogNewz.

What TransUnion found

Mortgage delinquency is now viewed as almost acceptable in the current housing market, a trend that may have costly repercussions. TransUnion explained that in 2010's fourth quarter, there were 7.24 percent of homeowners in the United States which were late on mortgages. These homeowners also were on time with charge card payments though. In the previous quarter, it was 7.40 percent, but the drop cannot be viewed as good news, said TransUnion consultant Sean Reardon.

"(It is now) 72 percent higher than it was at the beginning of the Great Recession,” he told the Huffington Post.

By comparison, only 3.03 percent of U.S. customers chose to fall behind on their credit cards to be able to keep up with their upside down mortgages. This category has never been so low. It is the lowest in history.

Why every little thing turned around

Not coincidentally, TransUnion found that more United States consumers began to pay more attention to their charge cards than their mortgages just a couple months after the financial collapse began in 2007. Booming unemployment and a poor housing industry submerged scores of subprime borrowers as the country shifted toward an unhealthy dependency upon credit.

The underwater mortgages are staggering right now. By the final quarter of 2010, 23 percent of U.S. homeowners had upside down mortgages, according to business data provider CoreLogic. That amounts to 11.1 million residential properties in negative equity; up from 10.8 million (22.5 percent) in the third quarter of 2010. The total percent of close to negative or negative mortgages are at 27.9 percent considering 2.4 million homeowners that have less than 5 percent equity. There are others that are avoiding paying mortgages. Reardon claims that they instead choose to pay credit cards.

“Initially it was,” he said, “but it spread across all risk segments. It’s now an issue at the national level.”

Information from

Corelogic

corelogic.com/About-Us/News/New-CoreLogic-Data-Shows-23-Percent-of-Borrowers-Underwater-with-$750-Billion-Dollars-of-Negative-Equity.aspx

Huffington Post

huffingtonpost.com/2011/04/06/americans-credit-cards-mortgages_n_842756.html

Refinance your mortgage and whittle down credit card debt

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