Racial barriers to homeownership in the U.S. are an undeniable reality for many, with Black Americans often facing the most obstacles when it comes to the homebuying process.
A new study from LendingTree, one of the nation’s leading online loan marketplaces, highlights one of the biggest hurdles that disproportionately impacts Black homebuyers: being denied for a mortgage. Specifically, LendingTree’s study looks at the spread in mortgage denial rates between Black Americans and the overall population in each of the nation’s 50 largest metropolitan areas.
For both purchase and refinance mortgages, LendingTree found that Black Americans are more likely to be denied a home loan than the overall population of homebuyers.
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Methodology
To conduct this study, LendingTree analyzed mortgage application records from the Federal Financial Institutions Examination Council’s Home Mortgage Disclosure Act 2020 data set, the most recent available. It includes mortgage applications submitted in 2019.
The data in this study was analyzed on the Metropolitan Statistical Area or “MSA” level.
Here are the 15 metro areas where Black borrowers are most likely to experience lending bias:
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15. Birmingham, Alabama
Overall mortgage denial rate: 6.05%
Mortgage purchase denial rate
for Black homebuyers: 12.95%
Spread in mortgage purchase
denial rates between Black
homebuyers and the overall
population of homebuyers: 6.90%
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14. Providence, Rhode Island
Overall mortgage denial rate: 6.66%
Mortgage purchase denial rate for Black homebuyers: 13.59%
Spread in mortgage purchase denial rates between Black homebuyers and the overall population of homebuyers: 6.93%
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13. Buffalo, New York
Overall mortgage denial rate: 5.56%
Mortgage purchase denial rate for Black homebuyers: 12.69%
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12. Raleigh, North Carolina
Overall mortgage denial rate: 5.39%
Mortgage purchase denial rate for Black homebuyers: 12.58%
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11. New York, NY
Overall mortgage denial rate: 8.53%
Mortgage purchase denial rate for Black homebuyers: 15.87%
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10. Atlanta, Georgia
Overall mortgage denial rate: 7.95%
Mortgage purchase denial rate for Black homebuyers: 15.36%
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9. Nashville, Tennessee
Overall mortgage denial rate: 5.59%
Mortgage purchase denial rate for Black homebuyers: 13.24%
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8. Philadelphia, Pennsylvania
Overall mortgage denial rate: 5.87%
Mortgage purchase denial rate for Black homebuyers: 13.57%
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7. Cincinnati, Ohio
Overall mortgage denial rate: 5.48%
Mortgage purchase denial rate for Black homebuyers: 13.42%
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6. Indianapolis, Indiana
Overall mortgage denial rate: 5.44%
Mortgage purchase denial rate for Black homebuyers: 13.54%
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5. Pittsburgh, Pennsylvania
Overall mortgage denial rate: 5.40%
Mortgage purchase denial rate for Black homebuyers: 14.16%
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4. Detroit, Michigan
Overall mortgage denial rate: 6.91%
Mortgage purchase denial rate for Black homebuyers: 16.58%
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3. Cleveland, Ohio
Overall mortgage denial rate: 5.47%
Mortgage purchase denial rate for Black homebuyers: 15.22%
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2. St. Louis, Missouri
Overall mortgage denial rate: 5.21%
Mortgage purchase denial rate for Black homebuyers: 16.19%
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1. Milwaukee, Wisconsin
Overall mortgage denial rate: 5.57%
Mortgage purchase denial rate for Black homebuyers: 17.73%
Image Credit: DepositPhotos.com.
Refinancing is even worse
The disproportionate number of mortgage denials is even worse when it comes to refinancing as you’ll see in the following data. These five cities have the largest discrepancy in refinancing rates for Black borrowers.
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5. Sacramento, California
Overall mortgage refinance denial rate: 20.36%
Mortgage refinance denial rate for Black homeowners: 39.48%
Image Credit: DepositPhotos.com.
4. San Antonio, Texas
Overall mortgage refinance denial rate: 19.75%
Mortgage refinance denial rate for Black homeowners: 39.42%
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3. Denver, Colorado
Overall mortgage refinance denial rate: 20.98%
Mortgage refinance denial rate for Black homeowners: 41.98%
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2. Philadelphia, Pennsylvania
Overall mortgage refinance denial rate: 11.59%
Mortgage refinance denial rate for Black homeowners: 33.82%
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1. Phoenix, Arizona
Overall mortgage refinance denial rate: 12.51%
Mortgage refinance denial rate for Black homeowners: 35.08%
This article originally appeared on LendingTree.com and was syndicated by MediaFeed.org.
Image Credit: DepositPhotos.com.
