US consumers are defaulting on credit-card payments at a significantly higher rate than last year, raising the prospect of problems in the stricken US subprime mortgage market spreading to other types of consumer debt.<\/p>\n
Credit-card companies were forced to write off 4.58 per cent of payments as uncollectable in the first half of 2007, almost 30 per cent higher year-on-year. Late payments also rose, and the quarterly payment rate \u201d\u201c a measure of cardholders\u2019 willingness and ability to repay their debt \u201d\u201c fell for the first time in more than four years.<\/p>\n
Analysts at Moody\u2019s, the rating agency, said the trend could be related to the slowdown in the US property market and a fall in the number of borrowers rolling their mortgage debt into new and cheaper home loans.<\/p>\n
\u201cThe combination of higher interest rates and a softer real estate market diminished the attractiveness of mortgage refinancings in which many borrowers reduced their more expensive credit-card debt by drawing on the equity in their home,\u201d\u009d Moody\u2019s said.<\/p>\n