Eyeballs vs. Simplicity: Today's Dilemna

A recent post by my colleague Leonard Kiefer at Freddie Mac caught my eye.  You can see the post on Linked In here.  You have to scroll down a little.

The chart is quite eye-catching.  Each box shows the share of cash-out refinances relative to total conventional refinances in the third quarter of each year since 1999.  If a mortgage is eligible for purchase by Freddie Mac or Fannie Mae (meaning it is below a certain dollar amount and meets certain underwriting criteria such as loan-to-value ratio and credit score), then it is considered 'conventional.'  A cash out refinance is one where the borrower has an existing mortgage for $X dollars and takes out a new loan for more than $X, using the proceeds to pay fees and have extra cash available for expenses such as health-care or tuition.  A entire house means that the share is 100% while a few scattered points means only a tiny share of conventional mortgages are cash-outs.  

The chart is interesting in that it shows a strong resurgence in the cash-out share.  I think the chart is far too complicated for showing a simple data series.  The kind of line charts in Excel would make the pattern clearer.  It's very hard, in this array format, to compare numbers from one row with those in another. 

I'm guessing Leonard chose this alternative method in order to catch eyeballs and get more clicks.  This is an example of a dilemna for those of us who work in data visualization.  We want you to look.  Sometimes we are motivated to sacrifice clarity to get your attention.  It may have been a simple matter of aesthetic taste.

Note also that this is measured as a share of conventional refinance mortgages.  The denominator, the number of conventional mortgage refinances, changes throughout this time period.  While interest rates were falling, for example, refinances were quite common while they are less so today.  It would be nice to include information on the number of refinances with this graph, perhaps on the same graph or in an accompanying chart.  

I'd love to help you understand how to use data visualization to communicate clearly, and to understand it well for business, and in particular, for the relevant section of the GMAT.  Please don't be a stranger!  Get in touch with me here.