Consumers Return to Paying Mortgages Over Credit Cards

According to new TransUnion research, as home values rebound, consumers in financial distress increasingly place more value on paying their mortgages than their credit cards—a reversal of the trend observed during the housing downturn. This return to traditional payment patterns validates that rising or declining home prices correlate strongly with consumer payment preferences.

Please complete the form to access the full study, which analyzes recent consumer payment patterns, including regional variances.

A new TransUnion study provides evidence that consumers in financial distress are placing increased value on paying their mortgages ahead of their credit cards, a reversal of the trend observed during the housing downturn. The study found consumers are still more likely to pay their auto loans ahead of their mortgages and credit cards. The study also validated the strength of the correlation between rising or declining home prices and consumer payment preferences for mortgages versus credit cards in situations of constrained liquidity.

Impact of Housing Prices on Different Markets

To determine how much of an impact housing prices had on the rate of payment of credit cards versus mortgages, TransUnion looked at the delinquency spreads between mortgages and credit cards over the sample period for consumers with both products, and compared that spread to the Standard and Poor’s Case-Shiller -City Home Price Index (HPI).

For instance, if the 30-day credit card delinquency rate was 1.25% and the 30-day mortgage delinquency rate was 1.75% for a given cohort of consumers, then there would be a 0.50% spread between the two variables. TransUnion explored this dynamic in several major markets to observe how they performed during the study period.

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