If the lines are parallel, there are no interaction effects.
If the lines intersect, it means there are some interactions.
If the lines are close appear to be deviating from each other, there are interactions.
If lines are steep, there is an effect and less steep no effect.
The mortgage is influenced by three main factors: region, mortgage size, and credit rating. The region is either Western or Eastern, mortgage size is either lesser or above $500,000, and credit rating is either fair or good. The above factors influence the number of days for mortgage approval.
The charts were developed using QI Macros in Excel. It assumed there are interactions among the three variables that influence the mortgage approval dates.
The sample size of five per combination was small and was unrepresentative for the characteristics of the entire population. Small sample size is applicable where the population has few items. It will be difficult for researchers to draw an inference of mortgage approval based on five items because of the high margin of error and outliers.
A large sample size could have been used per combination since many customers apply for a mortgage. A sample size of more than thirty could have been to represent the characteristics of the total mortgages. Large size is normally distributed, while a small sample size may follow a t-distribution that usually is skewed (Chow et al., 2017).
The application of mortgage the borrower would wish to consider loan installment per period. The amount payable depends on the size of the loan, interval, and interest rate of the loan (Berliner, Quinones & Bhattacharya, 2016). The borrower needs to plan methods to finance the loan repayments.
The income level of the borrower will influence the size of the mortgage to apply. People with a high-income level can afford a higher amount of mortgage and repay it within a shorter period, while borrowers with low income will use small mortgage size or high mortgage size and finance it for a longer time.
The firm should issue mortgage loans to borrowers who have a good credit rating, mortgage size of less than $500,000, and in the Eastern region. If the management adopts this decision, it will minimize the number of days to approve mortgage loans.
References
Chow, S.-C., Shao, J., Wang, H., & Lokhnygina, Y. (2017). Sample Size Calculations for Cluster Randomized Trials. Sample Size Calculations in Clinical Research: Third Edition, 337–348. doi: 10.1201/9781315183084-15
Berliner, B., Quinones, A., & Bhattacharya, A. (2016). Mortgage Loans to Mortgage-Backed Securities. The Handbook of Mortgage-Backed Securities, 3–29. doi: 10.1093/acprof:oso/9780198785774.003.0001
