Housing News

Credit Card Bills Before Mortgage Duties

New survey reveals a very surprising habit.

Credit and information management firm TransUnion recently released the results of its survey that speaks a growing trend among American homeowners: more people are prioritizing their credit card bills over their mortgage responsibilities. The decision to stay current on their credit cards is a growing concern among mortgage lenders who are already severely battered by the property market downturn. TransUnion’s official press release explains, “The study found that the magnitude of delinquency in the lowest scoring segment is significantly higher than that of the total market. The delinquency rate for consumers in this segment who were delinquent on their mortgages but current on their credit cards during Q4/2007 was 19.1 percent, and rose to 29 percent in Q3/2009. In a trend similar to that of the total market, the percentage of consumers delinquent on their credit cards but current on their mortgages decreased from 18.1 percent in Q1/2008 to 14.5 percent in Q3/2009.”

This “new” attitude among American homeowners is just reflective of the times. First, there seems to be a growing fad of simply walking away from homes. The number of those underwater in their loans has grown significantly and simply abandoning their homes is a much easier solution than finding ways on how to pay their mortgage. It’s not difficult to conclude then that this social fad is influencing homeowners to leave their mortgage bills piling up.

Second, many are aware of the dearth of jobs available. With distressed employment numbers released, it’s a sure thing that many would opt to be delinquent and continue to spend for more “immediate” purchases like food and utility bills.

Third, credit card bills are lower than mortgage payments so the income would have to be allocated first to expenses that are more manageable. It’s a natural decision-making process for most of us.

Finally, they’ll be looking forward to use their cards again after paying their current dues. This is the reason why they prefer to take care of their bills first whereas mortgages don’t provide them with “instant” benefit anymore since they’re living in the house for a couple of years already.

But going back to the basics, isn’t it sensible to think that we can live without a credit card but not without a roof over our heads? Come to think of it.

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