The big factor that influences mortgage arrears is the unemployment rate. You can’t very well pay your mortgage without a job. But the other factor is house prices. Even if you don’t have a job, if the market is going up you can take equity out of the house or you can sell for a profit with no problems. So looking at the BC stats, is there any relationship between house prices and arrears rates?
Pretty interesting how arrears tend to increase and stay high when house prices are flat or declining, and drop when they go up.
If we look at unemployment rate, we definitely see a strong correlation during the 2000s, but interestingly enough a stubbornly high unemployment rate did not seem to cause high arrears before 1995 (when the real estate market topped out and started stagnating).
Perhaps we need both? High unemployment is not enough to cause high arrears rates, but if house prices are flat or declining at the same time, it will cause arrears to spike.