Black homeownership – mortgage approval gap is widening

A recent look at HMDA data reveals disparity has grown to an alarming degree.

The mortgage approval gap between Black and White applicants has widened to an alarming degree, according to a new report from Zillow.


Zillow analyzed data from the Home Mortgage Disclosure Act (HMDA) and found that Black applicants are denied a mortgage at a rate 84% higher than White applicants – a significant increase from 2019, when it was 74%.


The report also revealed that 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. And broken down by location, Black applicants have the highest denial rates in Mississippi (31%), Louisiana (26.1%), Arkansas (26%), and South Carolina (25.8%).


“More than 6% of Black applicants are denied based on credit history, accounting for over one-third (37%) of all Black borrower denials,” Zillow said in its report. “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 non-traditional services, such as payday lenders, which contributes to poor credit health.”

“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 Nicole Bechaud, an economist at Zillow. “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.”

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