This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Mortgages Are Paid Ahead of Credit Cards Again (But Still Aren't First)

NEW YORK ( TheStreet) -- Back in the vortex of the Great Recession, when millions of cash-strapped Americans had to choose what bills they could afford to pay, the tendency was to pay credit card tabs before mortgage bills.

A March 2011 study by TransUnion noted that for the three straight prior years, consumers did just that, and that this "provided evidence that consumers adjust their payment behavior in response to their economic and personal financial environment," said Sean Reardon, lead author. "We continue to see a significant divergence in the rates of consumers opting to pay their credit cards while going delinquent on their mortgages."

That was then and this is now.

A new report from TransUnion points to a "correlation" between higher or lower real estate prices and how the average consumer prioritize their bills. Under this "payment hierarchy," as the economy has improved and home prices have risen, consumers are increasingly more apt to protect their properties than their plastic: up an average by 10% from June 2012 to June 2013.

TransUnion isn't focusing on all U.S. homeowners here, just those in financial distress and facing "situations of constrained liquidity." These homeowners evidently see the values of their homes rising, want to keep their mortgages current so they can protect that rising investment and are much more prone to choose paying their mortgages over their credit card bill as a result.

"The results of previous TransUnion research showed that, beginning in 2008, consumers with both a credit card and a mortgage had a higher propensity to go delinquent on their mortgages than on their credit cards -- a reversal of traditional payment patterns," says Steve Chaouki, co-author of the study. "With continued improvements in housing prices, it's probable that by the end of 2013 we will see the majority of consumers paying their mortgages ahead of their credit cards."

Interestingly, Americans still are more likely to pay their auto loan bill before either of the other categories, TransUnion says. That was the case in 2008 and it's the case in 2013.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.24 -1.01%
FB $117.26 -0.68%
GOOG $701.43 0.82%
TSLA $212.10 -4.70%
YHOO $36.94 2.61%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs