SEATTLE, Jan. 13, 2022 /PRNewswire/ -- The Black
homeownership rate that ticked up before the pandemic has again
begun to fall, spurred by a widening mortgage approval gap between
Black and white applicants. A Zillow analysis of data from the Home
Mortgage Disclosure Act (HMDA)1 shows
that while overall denial rates have decreased, Black applicants
are increasingly more likely than white borrowers to be denied a
mortgage.
Black applicants are denied a mortgage at a rate 84% higher than
that of white applicants — a big jump from 2019, when the disparity
sat at 74%. In the U.S., 19.8% of Black applicants are denied a
mortgage, the highest among all races, and much higher than the
10.7% of white applicants who are denied. Black applicants have the
highest denial rates in Mississippi (31%), Louisiana (26.1%), Arkansas (26%) and South Carolina (25.8%).
"Homeowners have seen a plethora of housing gains during the
pandemic, but the growing disparity between Black and white
homeownership rates and home values paints the picture of who those
winners actually are," said Zillow economist Nicole Bachaud. "While credit borrowers overall
are stronger now than ever, the gap in credit access is growing
along racial lines. Policies and interventions that target the
barriers keeping Black Americans from homeownership are keys to
achieving housing equity."
More than 6% of Black applicants are denied based on credit
history, accounting for over one-third (37%) of all Black borrower
denials. Limited traditional financial services in Black and other
communities of color is a significant factor in credit history.
Black communities have a higher number of nontraditional services,
such as payday lenders, which contributes to poor credit
health.
While the Black homeownership rate has risen from the depths it
hit following the Great Recession, it remains far below the peak of
49.7% reached in 2004. Becoming a homeowner is the first step — but
hardly the last — in the journey to housing parity. Black-owned
home values continue to lag behind those of other races, and are
still worth 16.7% less than homes overall. Black-owned home values
are appreciating at higher rates than homes overall, but would take
over 22 years to catch up, at this year's forecast rates of
growth.
Households of color, as well as renters and lower-income
households, were more likely to report encountering housing and
economic challenges due to the pandemic. Black households were more
likely than white households to report a job or income loss and
difficulty keeping up with mortgage or rent payments. This
disproportionate impact of the pandemic on Black households has
stalled efforts to close gaps in credit access, homeownership, home
values and mortgage denial rates, slowing the journey to equity
even more.
While there has been progress in increasing Black homeownership
since the Great Recession, there are still many challenges on the
way to achieving equity. Closing the credit and financial access
gap is a good start to get more Black renters on the path to
homeownership. The recent adoption of policies by Fannie Mae and
Freddie Mac allowing rental payments to count towards credit
history is a step in the right direction and a good example of how
policies can be used to target these issues. Zillow recently
launched a down payment assistance tool on all for-sale listings to
help potential buyers see the number of potential down payment
assistance programs that may be available to them.
About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and
ZG) is reimagining real estate to make it easier to unlock life's
next chapter. As the most visited real estate website in
the United States, Zillow® and its
affiliates offer customers an on-demand experience for selling,
buying, renting or financing with transparency and ease.
Zillow Group's affiliates and subsidiaries include Zillow®,
Zillow Offers®, Zillow Premier Agent®, Zillow Home Loans™, Zillow
Closing Services™, Zillow Homes, Inc., Trulia®, Out East®,
ShowingTime®, Bridge Interactive®, dotloop®, StreetEasy® and
HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS
#10287 (www.nmlsconsumeraccess.org).
1 The Consumer Financial
Protection Bureau (CFPB) maintains a public database of data
collected from mortgage lenders under the Home Mortgage Disclosure
Act (HMDA). The data referenced in this report is from 2020 HMDA
data.
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/black-mortgage-applicants-are-denied-84-more-often-than-whites-301460171.html
SOURCE Zillow