According to TransUnion, in 2011 customers who have a minimum of one open auto loan, bankcard and mortgage are more likely to keep up with payments on the auto loan, bankcard then the mortgage. This is a reversal in payment patterns that signifies a change in priorities motivated by loss of equity. The credit card priority has been consistent for four years now but this is the first year that auto topped the priority list.
The analysis looked at a sample of approximately 4 million consumers in each quarter of 2011 and found that 39.1 percent were delinquent on a mortgage while current on their auto loans and credit cards.
Becker said, “A few reasons why auto loans have become the preferred payment to make include the need for an auto to get to work or look for employment, and the fact that an auto loan is not a revolving loan – the impact of repossession is greater than the loss of a credit card.”
“This preference for prioritizing auto loans before credit cards and mortgages was seen in all 50 states throughout 2011.
Matt Komos, a co-author of the study and TransUnion consultant, said, “It appears that the shift back to prioritizing mortgage payments ahead of credit cards – or auto loans – may only occur once the housing market has stabilized and begins its recovery and the unemployment situation shows significant improvement”.