Black mortgage applicants 84% more likely to be denied than white applicants, analysis finds

by Patrick Regan

Shot of two business persons filling in paperwork at home.

The mortgage approval gap between Black and white applicants has widened, a Zillow analysis of Home Mortgage Disclosure Act data shows.

Black applicants were 84% more likely to be denied a mortgage than white applicants, the data showed, an increase from the 74% disparity in 2019.

Overall, 19.8% of Black applicants are denied a mortgage while 10.7% of white applicants are denied.

“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,” Zillow economist Nicole Bachaud said. “While credit borrows 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.”

Black applicants had the highest denial rates in Mississippi (31%), Louisiana (26.1%), Arkansas (26%), South Carolina (25.8%), Alabama (24.4%), Pennsylvania (23.6%), New York (23.4%), Michigan (22.2%) and Florida (21.8%), the analysis found.

More than one-third of denials to Black applicants are based on credit history. Limited financial services and the prevalence of payday lenders in communities of color contribute to poor credit health in those communities, the analysis said. 

Black homeownership rates are still behind the peak of 49.7% in 2004. The percentage plunged during the Great Recession and has rebounded but still sits at 44%.

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