Credit history company TransUnion has found that Americans are shifting their priorities when it comes to paying down debt.
Consumers are paying down their credit cards while ignoring their mortgage payments.
The company’s most recent study found that a rising percentage of Americans are current with their credit cards but delinquent on their mortgage payments.
At the same time, a falling percentage are deliquent on their credit card while current on their mortgage.
Moreover, this shift in debt payment priorities has been most striking in California and Florida:
Mortgage Insider: The shift in payment priorities are even more pronounced in California and Florida — the biggest housing bubble states. Within California, the percentage of consumers delinquent on their mortgages but current on their credit cards increased from 3.5 per cent in Q3 to 2007 to 10.2 per cent in Q3 2009. In Florida, the rate increased from 5.1 per cent in Q3 to 2007 to 12.4 per cent in Q3 2009.
Over the same period, the United States saw an increase from 4.0 per cent in Q3 2007 to 6.6 per cent in Q3 2009.
In contrast, the number of California consumers delinquent on their credit cards but current on their mortgages declined from 3.3 per cent in Q3 2007 to 2.7 per cent in Q3 2009.
Ezra Becker, director of consulting and strategy in TransUnion’s financial services business unit, said, “The implosion of the mortgage industry over the last 24 months, the resetting of adjustable-rate mortgages and the weak job market have all come together to redefine how consumers are managing their finances and meeting (or not meeting) their credit obligations.”
In the end you think you can just walk away from a mortgage, then why rush to pay it down. Moreover, credit card debt usually carries far higher interest rates than a mortgage, so in fact one wonders why this is even a new trend.
Business Insider Emails & Alerts
Site highlights each day to your inbox.