Mortgage Denial Rates Down, Especially Among Black Borrowers

Newly released data on mortgage access indicate that easing credit access is allowing more people to get approved for home loans, but black and Hispanic homeowners still lag behind in the recovery.

Nov 05, 2015, 08:00 ET from Zillow

SEATTLE, Nov. 5, 2015 /PRNewswire/ -- The percentage of U.S. mortgage applicants getting approved has increasedi, especially among middle-income black and Hispanic loan applicants, indicating that easing mortgage restrictions are making it easier for more Americans to become homeowners.

Despite that progress, black and Hispanic homeowners still lag behind whites and Asians in the housing recovery, according to latest Zillow® analysis of mortgage access and homeownership by raceii.

The new data highlight persistent home-valueiii and access-to-credit issues for racial and ethnic minorities, and reveal improved credit access for black and Hispanic mortgage applicants.

Some key facts:

  • In 2013, 27.6 percent of blacks who applied for a conventional home loan were denied. In 2014, that number had fallen to 23.5 percent, according to the most recent federal data released under the Home Mortgage Disclosure Act.
  • The overall denial rate for all applicants fell from 12.4 percent to 11.2 percent over the same time period.

Despite that improvement, there is still significant disparity in mortgage access among racial groups.

  • In 2014, blacks made up 12 percent of the U.S. population, but only 3 percent of conventional loan applicants. They made up only 2.5 percent of those approved for a conventional loan.
  • Hispanics make up 17.3 percent of the U.S. population, but represent only 6.1 percent of applicants and 5.5 percent of approved applicants for conventional loans.
  • Whites, on the other hand, make up 62 percent of the population, but 69.5 percent of conventional loan applicants and 71.9 percent of those approved for conventional loans.

Among those who already own homes, Asian neighborhoods have far outpaced others in housing appreciation since the housing market crashed. Homes there are now worth 11.9 percent more than they were at the peak of the housing bubble.

At only 4.7 percent below peak, white neighborhoods have nearly recovered to their peak value, but Hispanic communities' housing values are 20.3 percent below peak, while black communities' values are 16.7 percent below peak.

Metro Area

2013
Conventional
loan denial
rate, all
applicants

2014
Conventional
loan denial
rate, all
applicants

2013
Conventional
loan denial
rate, black
applicants

2014

Conventional
loan denial
rate, black
applicants

United States

12.4%

11.2%

27.6%

23.5%

New York-Northern New Jersey

15.2%

14.3%

29.0%

26.0%

Chicago, IL

12.6%

11.3%

32.1%

26.9%

Los Angeles, CA

13.4%

12.3%

21.6%

21.0%

Dallas-Fort Worth, TX

9.7%

8.7%

17.7%

17.0%

Houston, TX

10.2%

10.0%

19.6%

17.3%

Washington, DC

8.1%

7.9%

17.5%

14.6%

Boston, MA

8.2%

7.9%

22.8%

19.9%

Atlanta, GA

12.3%

10.2%

25.3%

19.7%

Philadelphia, PA

9.8%

9.1%

21.1%

20.2%

Seattle, WA

10.0%

9.1%

18.5%

18.5%

San Francisco, CA

9.8%

9.5%

21.1%

18.4%

Denver, CO

7.7%

7.0%

16.4%

11.0%

Minneapolis-St Paul, MN

6.5%

6.8%

17.6%

17.8%

Miami-Fort Lauderdale, FL

21.2%

19.5%

29.2%

30.3%

Phoenix, AZ

10.7%

9.7%

14.2%

10.6%

Detroit, MI

12.9%

11.4%

26.9%

25.0%

Portland, OR

7.3%

7.2%

14.9%

14.5%

San Diego, CA

10.6%

10.2%

13.1%

15.2%

Austin, TX

8.2%

8.7%

15.3%

17.0%

St. Louis, MO

10.3%

7.3%

31.0%

22.7%

Riverside, CA

14.1%

12.8%

18.7%

16.0%

Charlotte, NC

10.1%

9.2%

21.8%

16.5%

Tampa, FL

16.1%

14.7%

31.6%

28.7%

Baltimore, MD

8.3%

7.7%

18.7%

14.0%

Kansas City, MO

7.4%

7.0%

19.0%

15.5%

Nashville, TN

9.9%

8.2%

22.9%

17.3%

Sacramento, CA

10.0%

9.8%

14.4%

16.8%

Columbus, OH

11.3%

9.6%

24.5%

21.1%

San Jose, CA

9.7%

9.1%

13.6%

9.8%

Zillow

Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle.

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i Zillow examined 2014 data released under the U.S. Housing Mortgage Disclosure Act.

ii Zillow categorized ZIP codes by race, according to the racial or ethnic group with a majority share of the population (2013 American Community Survey). For each month, we estimated the weighted average median home value within these ZIP code subsets, where each ZIP code is weighted by the number of group members within its boundaries.

iii To determine home value, Zillow uses the Zillow Home Value Index: the median estimated home value for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period. It is expressed in dollars, and seasonally adjusted.

 

SOURCE Zillow