Black applicants twice as likely as whites to get denied for mortgage loans: study
A stark racial disparity still exists when it comes to receiving mortgage loans.
Although overall mortgage applications are getting denied at their lowest rate in the past 20 years, black applicants are still twice as likely as white applicants to get denied for a conventional loan, according to a new study from Zillow.
The overall share of applicants denied for conventional mortgages has dropped to 9.8 percent, a sharp decrease from its 18.1 percent rate in 2007. However, as of 2016, just 8.1 percent of white applicants were denied for a conventional loan, whereas 20.9 percent of black applicants were, the Zillow study found. Asian applicants were denied 10.4 percent of the time, and Hispanic applicants were denied 15.5 percent of the time.
The racial gap was even starker in New York, where white borrowers had an 8.8 percent denial rate, and black borrowers had a 22.2 percent denial rate, according to the study. It was not quite as harsh in Los Angeles, where whites had a 9.6 percent denial rate and blacks had a 15 percent denial rate. In Chicago, the difference was 7.1 percent to 19.9 percent, and in Miami, it was 13.3 percent to 25 percent.
Borrowers in suburban areas were the most likely to get approved for a mortgage across the board with an 8.4 percent denial rate, compared to a 10 percent denial rate for urban residents and an 11.5 percent denial rate for rural residents.
The disparity is also evident in homeownership, where the gap between white and black rates was higher in 2016 than it was in 1900. Black homebuyers last year could afford 55 percent of homes for sale, while white homebuyers could afford about 78 percent of them. Blacks were also more likely than any other race to cite qualifying for a mortgage as a problem for coming up with a downpayment on a house, according to the study.
“By some measures, the gap in mortgage approval rates between whites and blacks is as narrow as it has ever been,” Zillow senior economist Aaron Terrazas said. “However, black mortgage applicants are still more than twice as likely as whites to be denied, a visible legacy of historical discriminatory policies.”
Source: The Real Deal