White and Asian Borrowers More Likely to be Approved for a Conventional Loan

Black and Hispanic applicants twice as likely to be denied mortgages

By Jeff Sorg, OnlineEd Blog

(November 3, 2016 – Zillow) White and Asian borrowers are more likely to be approved for a conventional loan than black or Hispanic borrowers, according to the latest federally released data from the Home Mortgage Disclosure Act (HMDA). The disparity persists despite improvements in mortgage access for borrowers over the last few years.

In 2015, 22.4 percent of black applicants were denied conventional loans according to HMDA data. In 2010, 30.5 percent of black applicants were denied. Among Hispanic applicants, 17.3 percent were denied in 2015, down from 25 percent in 2010.

By comparison, 10.4 percent of all conventional loan applications were denied in 2015, a drop from 14.2 percent in 2010.

“Even though conditions have improved over the past few years, getting approved for a mortgage is still a significant barrier for some would-be buyers,” said Zillow Chief Economist Dr. Svenja Gudell. “Owning a home is an important way for the middle class to build personal wealth. It’s encouraging to see more black and Hispanic borrowers getting approved for mortgages, but there’s still a lot of progress that needs to be made.”

The problem is so entrenched that last week Fannie Mae and Freddie Mac announced programs designed to improve access to credit for these groups, which have historically had the lowest homeownership rates even though they are more likely to place a higher value on owning a home.

According to the Zillow® Housing Confidence Index, 68 percent of Hispanic respondents and 65 percent of black respondents considered homeownership necessary to living the American Dream. By comparison, 59 percent of white respondents and 58 percent of Asian respondents felt the same.

Homeowners are becoming increasingly diverse, data from the Zillow Group Consumer Housing Trends Report show. Even so, the homeownership gap between black and white households is as wide in 2016 as it has been for the past century[iii].

Metro Denial Rates for All Conventional Applications in 2015 Denial Rates for Conventional Loans from Asian Applicants in 2015 Denial Rates for Conventional Loans from Black Applicants in 2015 Denial Rates for Conventional Loans from Hispanic Applicants in 2015 Denial Rates for Conventional Loans from White Applicants in 2015
United States 10.4% 11.1% 22.4% 17.3% 8.7%
Atlanta, GA 9.6% 9.6% 18.9% 13.1% 7.1%
Baltimore, MD 8.1% 10.0% 16.6% 11.9% 6.2%
Boston, MA 7.0% 7.9% 17.2% 14.9% 6.0%
Charlotte, NC 8.8% 9.1% 16.0% 16.2% 7.0%
Chicago, IL 9.7% 10.7% 24.7% 18.6% 7.6%
Cincinnati, OH 8.6% 8.1% 19.8% 11.9% 7.9%
Cleveland, OH 7.7% 8.8% 19.4% 11.8% 6.7%
Columbus, OH 9.0% 10.6% 15.6% 22.0% 8.0%
Dallas-Fort Worth, TX 8.3% 9.5% 16.6% 11.9% 6.3%
Denver, CO 6.7% 8.2% 13.3% 10.3% 5.7%
Detroit, MI 9.9% 11.1% 21.0% 11.1% 8.6%
Houston, TX 9.9% 12.0% 17.7% 14.6% 6.9%
Indianapolis, IN 6.9% 9.7% 16.5% 16.0% 5.8%
Kansas City, MO 6.3% 9.9% 16.0% 14.3% 5.2%
Las Vegas, NV 12.8% 15.6% 17.3% 13.3% 10.3%
Los Angeles-Long Beach-Anaheim, CA 11.0% 11.1% 16.6% 12.9% 9.9%
Miami-Fort Lauderdale, FL 18.1% 18.7% 25.9% 20.4% 13.9%
Minneapolis-St Paul, MN 5.2% 7.2% 14.5% 13.1% 4.4%
Nashville, TN 6.9% 9.7% 16.5% 14.4% 5.9%
New York, NY 12.8% 13.8% 24.0% 19.7% 10.5%
Orlando, FL 13.6% 17.5% 22.5% 19.0% 10.7%
Philadelphia, PA 8.2% 11.4% 20.2% 13.8% 6.3%
Phoenix, AZ 9.5% 9.9% 16.8% 13.2% 8.3%
Pittsburgh, PA 7.2% 6.6% 11.7% 6.5% 6.8%
Portland, OR 6.1% 8.9% 10.3% 11.4% 5.2%
Riverside, CA 11.6% 14.8% 15.3% 13.4% 9.0%
Sacramento, CA 9.4% 13.0% 14.9% 12.8% 7.8%
San Antonio, TX 11.5% 9.2% 16.1% 16.7% 8.3%
San Diego, CA 10.2% 10.4% 16.0% 14.6% 9.6%
San Francisco, CA 8.5% 10.2% 17.6% 13.1% 6.6%
San Jose, CA 9.0% 9.3% 7.7% 11.8% 7.2%
Seattle, WA 8.1% 9.8% 19.2% 11.8% 7.2%
St. Louis, MO 8.0% 11.2% 25.0% 15.2% 6.7%
Tampa, FL 14.2% 15.9% 26.6% 18.1% 12.4%
Washington, DC 7.5% 8.8% 15.4% 12.3% 5.0%

SOURCE Zillow

###

Zillow is a registered trademark of Zillow, Inc.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Jeff Sorg

About the Author

Jeff Sorg is a co-founder of OnlineEd®, a Web-based vocational school founded in 1997 where he also serves as Corporate Secretary, Chief Operating Officer, and School Director. Sorg holds vocational instructor licenses in Oregon, Washington, California, and Nevada and has authored numerous pre-licensing and continuing education courses. Sorg was awarded the International Distance Education Certification Center's CDEi Designation for distance education in 2008. OnlineEd® provides real estate, mortgage broker, insurance, and contractor pre-license, post-license, continuing education, career enhancement, and professional development and designation courses over the Internet.