For the first time since 2008, people have changed the order in which they pay bills — but some experts say Americans still don’t quite have their priorities straight. A study released Wednesday by TransUnion found that as of September, Americans prioritize paying their mortgages over their credit cards — the first time they have done this since September 2008. However, they still prioritize paying their car loan over both their mortgage and credit cards, a trend that’s been happening for at least a decade. “Auto loans have always been in first place,” says Ezra Becker, co-author of the study and vice president of research and consulting for TransUnion.
Indeed, among consumers with auto loans, mortgages and credit cards, the 30-day delinquency rate for auto loans was just 0.87%, while it was 1.71% for mortgages and 1.83% for credit cards, as of December 2013; Becker says he expects that this trend toward prioritizing mortgages over credit cards will continue. Meanwhile, just a year earlier, consumers were favoring their credit cards over their mortgages: The 30-day delinquency rate in September 2012 for mortgages was 2.42%, while it was just 1.81% for credit cards.
“One of the biggest impacts of the Great Recession to the credit system was its influence on consumer-payment patterns,” says Becker. “As unemployment rose and home prices cratered, increasingly more consumers were faced with financial constraints and had to make difficult choices — and many chose to value their credit-card relationships above their mortgages.”