More than 20% of black mortgage applications rejected in Ohio
A new study by real estate firm Zillow found that more than 20% of black mortgage applications in Ohio were turned down in 2020, nearly double the rate of white applications.
Nationally, the study found that black mortgage applicants were turned down 84% more than white applicants, up from 74% in 2019.
While 20.5% of black mortgage applications were denied in Ohio, 11.7% of white applications were denied. The study also found that 23.2% of Native American mortgage applicants in Ohio were turned down, 11% of Asian applicants and 15.3% of Hispanic applicants.
Zillow said the findings, which are based on federal Home Mortgage Disclosure Act (HMDA) data, help explain the homeownership gap between blacks, other minorities and whites. According to the US Census, 44% of blacks are homeowners (up from a peak of 49.7% in 2004), compared to 74% of whites and 48.3% of Hispanics.
“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 a picture of who those winners really are,” the economist said. Zillow Nicole Bachaud, in a press release on the study. .
“The gap in access to credit is widening according to racial criteria”
The study looked strictly at mortgage denials and did not address whether different races with similar incomes, credit scores, payment histories or other loan criteria were approved at different rates.
But the study sheds light on why black people are being denied mortgages.
Zillow found that more than 6% of black applicants were rejected because of their credit history, accounting for 37% of all black mortgage rejections, illustrating black people’s historical lack of access to credit.
“While credit borrowers as a whole are stronger than ever, the credit access gap is widening along racial lines,” Bachaud said.
In the study, Zillow applauded efforts to expand black people’s access to credit, such as recent decisions by federal mortgage services Fannie Mae and Freddie Mac to allow rent payments to be counted in the history of credit.
Zillow found that black mortgage applicants were most often turned down in Mississippi (31%), Louisiana (26.1%), Arkansas (26%) and South Carolina (25.8%).
Zillow also noted that black-owned homes are worth 16.7% less than homes as a whole. While black-owned homes are appreciating at higher rates than homes as a whole, it would take more than 22 years to catch up to current appreciation rates, according to Zillow.