Mortgage rejection rates among mortgage borrowers are twice as high as the general population
Mark Hunt | Disability | beautiful pictures
Owning a home is one of the most important ways to build wealth. But for the aspiring black homeowner, that can be a difficult milestone to achieve, according to one New report from LendingTree.
Research from the online loan marketplace firm shows mortgage rejection rates for Black homebuyers are twice as high as the total population of borrowers in the country’s 50 largest metropolitan areas.
When it comes to applying for a mortgage, an average of 18% of black borrowers are denied a loan compared to a 9% rejection rate for the general population.
LendingTree’s analysis is based on data from the Mortgage Disclosure Act 2020.
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“The real problem exists,” said Jacob Channel, senior economist at LendingTree. “We have data backing that up.
“But there are solutions, and black homebuyers should not lose faith that they will never be able to become homeowners,” he said.
The Best and Worst Cities for Mortgage Rejection
The city with the largest disparity between mortgage rejection rates for Black borrowers and the general population is St. Louis, LendingTree found, where the percentage for Blacks was 20.73% compared with 7.33% for the general population, the total difference was 13.40 percentage points.
Boston and Jacksonville, Florida, come in second, as each has a difference of 13.34 percentage points between mortgage rejection rates for Blacks and the general population. In Boston, the percentage of blacks buying a home was 20.85% versus 7.51%; in Jacksonville, the rate was 25.01% versus 11.67%.
Three West Coast metropolitan areas are best suited for Black homebuyers: Seattle, San Francisco, and Sacramento, California.
San Francisco came out on top, with a spread of just 2.35 percentage points; at 11.79% for Blacks compared with 9.44% for the general population.
Next is Sacramento, with a margin of 4.64 percentage points: 13.12% versus 8.48% overall. And Seattle came in third, with a difference of 4.83 percentage points: 12.74% versus 7.91%.
What Black Borrowers Can Do
Channel said that while progress has been made to give aspiring Black homebuyers a more equal opportunity than the general population, it has been slow and incremental.
One recent national survey of race and ethnicity, 45% of Black respondents said the home they currently live in is owner-owned, compared with 55% who said it is rented.
This is lower than 65% of all respondents who said they live in a home owned by their own owners, and the lowest rate compared to this rate among whites and minorities such as Latinos, Asians, and Europeans. Asian and Native Americans, survey from NPR, The Robert Wood Johnson Foundation. and the Harvard TH Chan School of Public Health were found.
“There’s a lot of subconscious bias, and I don’t think people necessarily always realize that bias exists or how to detect it in the first place and how to prevent it,” Channel said.
Don’t give up hope because you have one or two job applications rejected. There are always options.
Jacob’s Channel
senior economist at LendingTree
For blacks who hit a roadblock, it’s important to remember that millions of black homeowners in the US have been able to get loans and secure home ownership, he said.
“The first thing is don’t let this completely discourage you,” Channel says.
If you feel you are a victim of discrimination, you can report it to your state attorney general or the US Department of Housing and Urban Development.
For all homebuyers, having a solid financial record improves your chances of being approved for a loan. That includes a high credit score, a steady income, and fewer missed bill payments.
There are programs that can help borrowers with lower credit scores, such as loans through the Federal Housing Administration, as well as programs at the state and federal levels.
It’s important to remember that a rejection is not the hallmark of all lenders, according to Channel.
“Don’t give up hope because you have one or two applications rejected,” he said.
“There are always options,” Channel added. “There may be other lenders that can work with you.”
