Research from TransUnion shows that at the end of 2013, after about two years of home appreciation, borrowers resumed their normal pattern of paying the mortgage before credit cards.
Across all 50 states, homeowners who experienced deeper depreciation and higher unemployment rates more often skipped payments on mortgages while keeping current on credit cards. Borrowers were more willing to default on home loans because all of their equity had dried up and foreclosure was not looming, according to the researchers; however, missing credit-card payments could have eliminated a key source of liquidity.
The findings suggest that as home prices rise, borrowers may act more predictably again and could give lenders greater confidence to extend credit. "When you're back to normalcy, it makes credit extension and management more predictable and manageable, which is exactly what you're trying to do when you're making loans," says TransUnion's Steven Chaouki.