Credit card activity 'a sign of mortgage prospects'

A consumer's credit card activity can be a key indicator of whether or not they can afford their mortgage, it has been suggested.

Investopedia has set out a list of tell-tale signs that point to mounting financial trouble and the likelihood of mortgage default.

These include the practice of only making the minimum repayments on credit cards, with Investopedia noting that this can lead to expensive debts building up over time, thereby hindering a person's chances of keeping up with home loan repayments and other obligations.

"In your mind, paying the minimum due on each bill may mean you are keeping up with your financial commitments, but financial experts know that minimum-only payments are a key indicator of financial distress," it said.

"While this may mean that you carry too much debt, this also means that all your income is barely covering your spending."

Consumers aiming to limit their debts could choose to compare credit cards in search of the best options. Last week, Reserve Bank head of financial stability Luci Ellis noted that although there has been a levelling off in the household debt to income ratio, that debt remains high.

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