🏘️High-Income Mortgage Denial Rate Gaps by Race and Ethnicity

Goal B: Homes for All

Black-White gap, 2020: 13 percentage points, 4 points lower than 2010 

Latinx-White gap, 2020: 10 points, 1 point higher than 2010 

Asian-White gap, 2020: 2 points, 2 points higher than 2010 

Native American-White gap, 2020: 2 points, 7 points lower than 2010 

Homeownership plays an outsized role in household wealth generation. Centuries of racist real estate, zoning, and lending practices have contributed to the racial wealth gap in America—and the Metro Boston region. Today, discriminatory lending practices remain a significant barrier to homeownership for people of color, even those with relatively high incomes.

In the MAPC region, eight percent of mortgage applications from high-income borrowers [1] were denied in 2020. This figure masks racial and ethnic disparities: while high-income White [2] applicants were denied at a rate of seven percent, high-income Black applicants were denied at a full 20 percent, a gap of 13 percentage points. High-income Latinx applicants were denied mortgages at a rate of 18 percent, a gap of 11 percentage points. Mortgage denial rates were somewhat lower for high-income Native American (nine percent) and Asian applicants (nine percent) but remained higher than those for White applicants.  

Since 2010, when the region was still recovering from the 2008 recession, mortgage denial rates for all high-income applicants have decreased. However, denial gaps between borrowers of color and White borrowers have not consistently closed. Latinx borrowers in 2020 had a higher denial gap by one percentage point (nine points to 10) with White borrowers than in 2010. High-income Asian applicants, who had no denial gap with White applicants in 2010, had a gap of two percentage points in 2020. High-income Black applicants, whose denial gap did decrease, from a 17 percentage point gap in 2010 to a 13 percentage point gap in 2020, continue to have the largest denial gap, and a denial rate that is more than 2.5 times higher than that of high-income White applicants.

Mortgage discrimination is illegal under two federal laws, the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA). Yet the data suggest that it still occurs. To make meaningful progress in closing mortgage denial rates for borrowers of color, in particular Black and Latinx borrowers, federal and state lawmakers must go farther to enforce these laws and to fund Fair Housing activities that can identify discrimination as it is happening. Lawmakers must also create legal pathways to actively redress centuries of real estate discrimination and give prospective homeowners of color a fair shot.

MetroCommon Goals: All residents of Metro Boston have places to live that meet their needs, and that they can afford, Goals B.7 and B.8

MetroCommon Recommendations: Ensure that people of all races and income levels have equal access to affordable housing through homeownership and rental opportunities in every community, Action 1.1

Footnotes:

1. High-income borrowers are defined as those with an income higher than 120 percent of the American Community Survey (ACS) Median Family Income for the Boston MSA. Using these methods, the high-income threshold in 2020 was $145,560; in 2015 it was $119,864, and in 2010 it was $102,990.

2. The terms Asian, Black, Native American, and White refer to non-Hispanic/Latinx applicants.