Skip to content
Real Estate
Link copied to clipboard

Mortgage Denial Rate Higher for Blacks, Hispanics

The denial rate for black applicants for conventional mortgages in the Philadelphia metro area is more than two and a half times higher than the rejection rate for white applicants, Zillow’s latest analysis of race and home ownership data has found.

By Nora Tooher

The denial rate for black applicants for conventional mortgages in the Philadelphia metro area is more than two and a half times higher than the rejection rate for white applicants, Zillow's latest analysis of race and home ownership data has found.

The denial rate for black applicants in the Philly area was 21.1 percent, compared with 8 percent for white applicants. The denial rate was 16.7 percent for Hispanic applicants and 12.6 percent for Asian applicants.

The rejection rate for all conventional loan applicants in the Philly metro area was 9.8 percent, the study found.

The local results are in line with national data, which shows that applications from black and Hispanic borrowers are 2.7 and 2.1 times respectively more likely to be denied a conventional mortgage compared with white applicants.

The research also shows that blacks and Hispanics are less likely to apply for conventional mortgages. Although 12.3 percent of the nation's population is black, blacks submitted only 2.7 percent of conventional mortgage applications. And while 17.1 percent of the nation's population is Hispanic, Hispanic applicants submit only 5.5 percent of conventional mortgage applications.

The bottom line, Zillow researchers concluded, is that black and Hispanic homeowners have a harder time securing a home loan and face a steeper climb to a full housing recovery than white and Asian homeowners.

The disparity in loan approvals is likely tied to a number of factors, including income. Black and Hispanic applicants for conventional home loans make roughly $20,000 less per year than white applicants, resulting in much higher denial rates.

Nationwide, the homeownership rate is much higher for whites – 71.1 percent – compared with blacks, 41.9 percent, and Hispanics, 45.2 percent, according to the U.S. Census Bureau's 2013 American Community Survey.

In the Philadelphia metro area, the white homeownership rate is 75.5 percent, compared with 47.3 percent for blacks, 43.3 percent for Hispanics and 60.8 percent for Asians.

Related:
Understanding Mortgage Credit Scores
Calculate a Monthly Mortgage Payment
How to Fix a Bad Credit Rating

Published