Consumers Choosing To Pay Charge Cards Over Mortgages

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U.S. consumer patterns in payment of debts have experienced a sea change since the recession, states the Huffington Post. Usually, this had never been the case. But the subprime crisis has sent so several mortgages underwater that consumers can only keep up with the credit cards anymore. Post resource – Consumers opting to pay credit cards over mortgages by MoneyBlogNewz.

Tracking trends lead to discovery with TransUnion

Home loan delinquency is now viewed as almost acceptable in the current housing market, a trend that may have costly repercussions. About 7.24 percent of homeowners in the U.S. were, in the fourth quarter of 2010, paying their credit card payments but are late on mortgages, according to TransUnion. In the previous quarter, it was 7.40 percent, however the drop can’t be viewed as good news, said TransUnion consultant Sean Reardon.

“(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 home loan payments doesn’t occur very often. Only about 3.03 percent of U.S. consumers do this. This is the lowest in history for this category.

Why everything turned around

A few months after the 2007 financial collapse started, TransUnion found out that more United States consumers were interested in paying charge cards than mortgages. Booming joblessness and a poor housing industry submerged scores of subprime borrowers as the country shifted toward an unhealthy dependency upon credit. Right now there isn’t much of a growth in underwater mortgages. They’re staying the same. By 2010’s final quarter, many Americans already had upside down mortgages. CoreLogic states this integrated 23 percent of Americans. There was a rise from 2010’s 10.8 million residential properties in negative equity to 11.1 million. That was a 22.5 percent increase. The total percent of close to negative or negative mortgages are at 27.9 percent considering 2.4 million homeowners that have less than 5 percent equity. Reardon explained that other borrowers have been deciding to pay credit cards over mortgages also.

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

Information from

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

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