More Americans are putting off mortgages loans in favor of credit card payments, according to a recent study by TransUnion. The study points to the housing bubble effect among reasons for this “flip,” which runs counter to conventional wisdom about payment hierarchy.
“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,” said Ezra Becker, director of consulting and strategy in TransUnion’s financial services business unit.
The trend emerged during the first quarter of 2008 and is more pronounced in states such as California and Florida, where foreclosure rates soared. The number of consumers current on credit card and delinquent on mortgage payments increased by 191 percent in California from third quarter 2007 to third quarter 2009. It increased 143 percent in Florida during the same time frame.
Nationally, the number of consumers delinquent on mortgage payments but current on credit cards increased 68 percent, according to the study.
Foreclosure filings were made on 937,840 properties during the third quarter 2009, according to RealtyTrac’s U.S. Foreclosure Market Report. September ranked third for highest filings since the report began in 2005.
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