More people paying charge cards before mortgages

United States consumer patterns in payment of debts have experienced a sea change since the recession, states the Huffington Post. It used to be that ignoring a mortgage was unthinkable. Yet when the subprime home loan crisis put several homeowners underwater, addressing charge card debt seemed the more feasible choice, states the Huffington Post.

TransUnion has tracked the disturbing trend

It may be really bad if the housing market considers mortgage delinquency acceptable. This is what is starting to occur. About 7.24 percent of homeowners in the U.S. were, in the fourth quarter of 2010, paying their charge card payments but are late on mortgages, according to TransUnion. TransUnion reported that it was 7.4 percent in the quarter before that, although consultant Sean Reardon explained this is probably not good.

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

Letting charge cards sit to pay mortgage payments does not occur very often. Only about 3.03 percent of U.S. consumers do this. This is the lowest in history for this category.

Turning the tide

Not coincidentally, TransUnion found that more United States consumers started to pay more attention to their charge cards than their mortgages just a couple months after the financial collapse started in 2007. The country, when becoming more dependent on credit than anything else, has had difficulty with unemployment and the poor housing market.

The growth in number of underwater mortgages is staggering. By 2010's final quarter, many Americans already had upside down mortgages. CoreLogic reports this involved 23 percent of Americans. That amounts to 11.1 million residential properties in negative equity; up from 10.8 million (22.5 percent) in the 3rd quarter of 2010. Another 2.4 million homeowners have less than 5 percent equity, making the total percentage of negative and near-negative equity mortgages 27.9 percent nationwide. But it hasn’t just been subprime borrowers choosing to pay their credit cards instead of their mortgages, notes Reardon.

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

Articles cited

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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