Unemployment Rate Correlation with Mortgage Delinquency

You may have missed a terrific chart Bill showed over the weekend at Calculated Risk: States: U-6 Unemployment Rate vs. Mortgage Delinquency Rate. Its a state by state look at the correlation between mortgage delinquency and U6 Under/Unemployment. 

I would describe the correlation between the two as significant but not overwhelming. However, we must also recognize that there is a real world lag between the loss of income caused by a firing or a decrease in available hours, and any subsequent mortgage delinquencies. Perhaps a 4 or 6 quarter shift in the U6 data would show a tighter correlation.

The chart (below) goes a long way in challenging those who live on anecdotal tales of gainfully employed profligate spenders who are living the high life by not paying their mortgages. To the contrary, the data shows that the income loss associated with unemployment (and underemployment) is a significant factor in mortgage delinquency.

Additionally, note the two outliers in terms of delinquency: Florida and Nevada, with the former a recourse (but homestead) state and the latter a non recourse state.

Unemployment Correlation with Mortgage Delinquency

click for chart


chart courtesy of CalculatedRisk

If anyone wants to produce evidence of the contrary, I am willing to post an alternative explanation.


States: U-6 Unemployment Rate vs. Mortgage Delinquency Rate CalculatedRisk , May 23, 2010


Originally pubished at The Big Picture and reproduced here with the author’s permission.
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3 Responses to "Unemployment Rate Correlation with Mortgage Delinquency"

  1. Harvey Whitemane   May 2, 2013 at 11:31 pm

    That's an easy thing to correlate. It doesn't take a rocket scientist to figure out that the higher the unemployment rate, the higher the number of people who will have trouble with mortgages. It's all about the money in this case.

  2. Liam Pennyworth   May 6, 2013 at 9:44 pm

    Then why don't they do something about the rising unemployment rate? That's the root of all these problems. You can't really do much without stable income – and that's not even considering owning a house.

  3. Joseph   May 16, 2013 at 1:04 pm

    Actually, i have been asked if I am still employed coz if yes they are going to offer me something that's really right for me.