The latest study is an update to a study released in 2010, which reviewed data up to Q3 2009. The newest study was conducted on consumers that had at least one credit card and one mortgage, and examined 30-day credit card and mortgage delinquency data between the third quarter of 2006 (Q3 2006) and the fourth quarter of 2010 (Q4 2010). The percentage of consumers current on their credit card payments and delinquent on their mortgages first surpassed the percentage of consumers current on their mortgages and delinquent on credit cards in the first quarter of 2008 (Q1 2008). Although many industry analysts believed that a reversion to the conventional payment hierarchy would ensue once the recession had concluded, this has not been the case.
To the contrary, this study found that the hierarchy reversal has become even more widespread, with the percentage of consumers who are delinquent on their mortgages and current on their credit cards rising to as high as 7.4 percent in Q3 2010 (from 4.3 percent in Q1 2008). This statistic dropped for the first time in Q4 2010 to 7.24 percent. Conversely, the percentage of consumers who are delinquent on their credit cards and current on their mortgages decreased to its lowest level ever — 3.03 percent — in Q4 2010. This rate had been at 4.1 percent in Q1 2008.
In a separately commissioned study, it is apparent that consumers are not consistent in their attitudes about what they would pay first, as compared with the actual payment data analyzed by TransUnion.
Interestingly, in a February Zogby International survey commissioned by TransUnion, the large majority of adults (79 percent) said that if they could only make one payment in the current month, they would pay their mortgages, followed by just 9 percent who said they would pay a credit card bill and 5 percent who would pay an auto loan. Yet the actual payment performance data belie these intentions. Of the consumers who defaulted in Q4 2010, 52 percent defaulted on their mortgages while keeping their credit cards current and 22 percent defaulted on credit cards while keeping their mortgages current.
TransUnion notes these patterns may be starting to shift, but still remain in this historically atypical pattern.
Click here to read more: http://www.marketwire.com/press-release/TransUnion-Study-Finds-Consumers-Continue-Paying-Credit-Cards-Before-Mortgages-Though-1418751.htm
