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Black Mortgage Applicants are Denied 84% More Often than White Applicants

Black Mortgage Applicants are Denied 84% More Often than White Applicants
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The mortgage rejection rate for black applicants is 84 percent higher than for white applicants, according to data from Zillow in 2020, the year with the most data available. This is an increase from 2019 when the rejection rate was 74 percent higher.

Are we surprised? No, but it’s still frustrating as hell? Yes

According to Zillow, 19. Mortgage rejections are 8% of black applicants, the highest for all racial groups and 9 percentage points higher than whites. The states with the highest rates were Mississippi (31 percent), Louisiana (26.1 percent), Arkansas (26 percent) and South Carolina (25.8 percent).

Sounds similar to the problem Airbnb has with hosts who deny capabilities Black guests because of the sound of their names.

Black ownership overall is up 44 percent, but it’s still below the peaks reached in the early 2000s. The highest percentage was 49.7 percent in 2004.

more than Zillow:

Households of color, as well as renters and low-income families, were more likely to report coincidence Housing and Economic Challenges due to the epidemic. Black households were more likely than white households to report a job or loss of income and difficulty keeping up with mortgage or rent payments. This disproportionate impact of the pandemic on black families has stalled efforts to close gaps in credit access, home ownership, home values, and mortgage rejection rates, making the journey to justice slower than it already was.

Before Search Zillow It shows that black renters face a greater obstacle to jumping in when saving for down payment, which often stems from income inequality. The median income for black home-purchasing applicants in 2020 was $67,000, compared to an aggregate median of $83,000 for all applicants. This may help explain why black mortgage applicants get lower down payments in 2020 than applicants of other races. Black applicants place an average of 3.5% on home purchase applications, which is barely above the absolute minimum of 3% required for most conventional loans, and less than half the average down payment of 8.9% of all applicants.

We already knew that the coronavirus pandemic happened It has disproportionately affected black people when it comes to health. But this study also sheds light on how the pandemic has disproportionately affected blacks economically.

The study also found that black applicants buy homes less expensive than any other race. In 2020, the median property value was $225,000 for black applicants and $275,000 for all other applicants. Payments from black applicants were $16,600 less than the average total down payment in 2020, according to Zillow.

The research claimed that it could take another decade for black applicants to receive the same down payment as all applicants.

Decade?! This just shows how great the disparity is between blacks and other races when it comes to home ownership. Assuming appropriate effort is made to ensure this gap is reduced.

More from Zillow on how insufficient credit affects mortgage rejections:

Access to traditional financial services is another source of large variation in down payments and access to mortgages. As in previous years, insufficient credit remained the most common reason for black mortgage rejections in 2020 – over 6% of black applicants were rejected based on credit history, which is the reason for more than a third (37%) of all rejections. black mortgage. relative deficiency traditional financial services In primarily black communities (along with primarily Hispanic communities) is an important driver of the large gap in the credit history of black applicants. The high prevalence of non-traditional services (payday lenders, etc.) and the lack of traditional services (eg banks) contribute to Poor credit health For entire communities, particularly communities of color.

Bad credit equals a bad ownership rate.

While all of this data may sound negative, there are some positives that can be taken from this study.

According to Zillow, the value of black-owned homes is actually increasing 1.5 percentage points above all home values, and is expected to increase at a pace of 0.8 percentage points above all home values ​​by September 2022.

However, it would also take more than two decades for the value of black homes to reach the overall average.

More from Zillow:

Part of this problem revolves around disparities in home valuation, including valuations and property tax rates, which are often unfavorable for homeowners of color and/or largely non-white neighborhoods. Black houses and houses are often in black neighborhoods Rated lower, But Higher tax assessments than they should be. This results in black homeowners getting too little on sales and paying too much in taxes — further deepening the wealth gap.

While there has been progress in home ownership for blacks in the past few years, there are still many challenges in the path to housing equity. Homeowners have seen a large number of housing gains during the pandemic, but the growing disparity between black and white home ownership rates and home values ​​actually paints a picture of these winners. While credit borrowers in general are stronger now than ever, the gap in access to credit is growing along ethnic lines. Policies and interventions that target barriers to home ownership by black Americans are keys to achieving housing equity. Closing the credit and financial access gap is a good way to get more black renters on the path to home ownership.

We already knew that the home ownership gap for blacks was low cCompared to other demographics in the United States. But what this study has shown is that it will take a great deal of work and effort to ensure equality between black homeowners and all other groups.


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