Borrowers paying mortgages over credit cards again

As the housing market and hiring continue to recover, consumers are making their mortgage payments a priority again.

A growing number of borrowers are paying off their home loans before their credit card debts, reversing a trend first seen in September 2008, according to a TransUnion study that examined the delinquency rates of borrowers with mortgages, auto loans and credit card debt.

The delinquency rate for mortgages fell to 1.71% in December, down from 3.32% in September 2008. Meanwhile, the rate of credit card delinquencies was 1.83% in December, down from 3.29% in 2008.

After the housing bubble burst, many borrowers owed more on their homes than they were worth and stopped making mortgage payments a priority.

“As unemployment rose and home prices cratered, many borrowers chose to value their credit card relationships above their mortgages,” said Ezra Becker, vice president of research and consulting for TransUnion. “When people lose jobs they need credit cards as a source of liquidity.”

Yet, last September the delinquency rates began to shift to pre-recession norms: Mortgage delinquencies fell to 1.79%, while credit card delinquencies came in at 1.86%, TransUnion found.

One debt borrowers continue to prioritize over everything else is auto loans, mainly because they rely on their cars to get to work.

In December, the delinquency rate on auto loans was 0.87%, compared with 1.65% in September 2008.

The economic recovery, has eased loan payment problems of all kinds. Unemployment, at a February rate of 6.7%, is more than three percentage points lower than it was in September 2009 when mortgage delinquencies reached a peak of 4.92%, according to TransUnion’s data.


About thenoelteam

As a Broker with RE/MAX Alliance, I work energetically for my clients whether they are a buyer or seller. I help you achieve your goal of owning a home or getting the best price for your home in the shortest time possible. After graduating from UCLA with a degree in communications and finance, I was licensed in 1977 and since then I have sold over 3600 properties amounting to over $1 billion in sales. I currently rank in the top 10 in home sales for Colorado. I offer the same quality of service and superior communication to all clients, ranging from starter homes to multi-million dollar estates, commercial and income properties, relocations and foreclosures My goal is to provide you with the best representation possible whether you are buying or selling. Over the years, one of the things that I've discovered is that there is a difference in the way individual Realtors do business. For me, I have always felt that honesty and personal integrity are the foundations upon which a successful business and career are built and sustained. I have an extensive background and knowledge base in real estate, including financing, which has enabled me to provide outstanding, quality advice and service not found with many agents today. My commitment to communication creates a positive relationship between my client and myself that results in a successful property sale or purchase. My passion for real estate, commitment to my clients and personal integrity has helped me to achieve success placing me in the top 1% of all brokers in nationwide. In my career, I have earned a number of awards and received considerable recognition for my success but the most significant recognition comes from the fact that over 75% of my business comes from past clients. My success is a true measure of my client satisfaction.
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