Academic journal article ABA Banking Journal
Consumers Shift Attitudes on Mortgage Debt
For the first time since the housing collapse, troubled borrowers are making their mortgage payments about as often as their credit card payments, according to TransUnion LLC's latest payment hierarchy study. Company analysts anticipate that in time--probably by yearend--consumers will be paying mortgages ahead of credit cards again.
The shift seen nationally seems to be the result of a rising tide that favors all types of outstanding debt--not the result of a shift from one debt preference to another.
Overall, "this is really positive news for lenders," said Steve Chaouki, coauthor of the TransUnion study and group vice-president in the company's financial services business unit, in an interview. "They will have the opportunity to lend more as delinquencies drop."
Traditionally, lenders believed consumers would, above all else, work to keep current on home loans, but starting in 2008, that behavior flipped. Troubled borrowers with a credit card balance and a mortgage were more likely to become delinquent on their home loan than on their credit card. The popping of the housing bubble left them less, or nothing, to preserve of their own. This was especially the case where new mortgage types got people into homes with less personal investment. …