Mortgage applications from borrowers of color are denied significantly more frequently than those from white borrowers, a recent analysis shows.
In 2023, 27.2% of Black applicants were denied a mortgage, more than double the 13.4% of white borrowers. That’s a full 10 percentage points higher than borrowers of all races, according to the analysis of the Home Mortgage Disclosure Act from the Urban Institute’s Housing Finance Policy Center.
The application data confirms deep disparities in mortgage financing that show up elsewhere in the housing market: Black borrowers accounted for only 8.5% of all purchase mortgage borrowers in 2023, for example – also according to HMDA. Meanwhile, in 2024, the Black homeownership rate is 45.3%, a whopping 30 percentage points below that of white households, at 74.4%. For Latinx households, it’s 48.5%.
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Urban Institute researchers Michael Neal and Amalie Zinn were motivated to dig into the HMDA data, which many housing industry participants consider the most comprehensive data available to the public, when they saw overall denial rates shifting with recent changes in borrowing costs.
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As the chart above shows, denial rates declined – meaning more mortgages were approved – in 2020 and 2021 – before ticking back up in 2022, when the Federal Reserve began hiking interest rates to cool inflation.
The Urban researchers’…
