Friday
April 18, 2014

Consumers Put Mortgage Payoff Ahead of Other Debt

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Consumers Put Mortgage Payoff Ahead of Other Debt

In a reversing trend, more consumers in financial distress are opting to pay off their mortgage debt first, ahead of other types of debt, according to TransUnion.  

The 30-day mortgage delinquency rates are trending far below credit card delinquencies. As home prices rise and more home owners see equity again, consumers are more likely to put a higher priority on paying off their mortgage, TransUnion says. 

In markets where prices are dropping, however, other types of debt often become a bigger priority to consumers than mortgage debt. 

"We did see a big change in the traditional payment hierarchy during the recession," says Toni Guitart, TransUnion's vice president of research. "Consumers would make payments on their credit cards more so than on their mortgages because that was associated with the big decline in housing markets. But now, over the past year, the amount of consumers that are paying mortgages over credit cards has reversed to the traditional payment hierarchy."

Consumers are reverting back to payment patterns they held prior to the Great Recession by putting their mortgage debt ahead of credit card debt, TransUnion researchers note. Consumers are valuing their mortgage payments as much as their credit cards for the first time since the housing bubble. However, auto loans remain the most valued out of the three. 

Source: “Consumers Moving Back to Paying Mortgages First: TransUnion,” Credit Union Times (Sept. 19, 2013) and “Consumers prioritize mortgages over other types of debt,” HousingWire (Sept. 19, 2013)

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National Mortgage Delinquency Rate Plummets