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The Mortgage Denial Rate Was 84% Higher for Black Applicants in 2020

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Demographics

The Mortgage Denial Rate Was 84% Higher for Black Applicants in 2020

A marginalized housing market leaves Black homeowners with less affordability and larger hurdles to jump


January 13, 2022
systemic discrimination
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As a result of racial disparities in the mortgage and housing markets, Black applicants were denied a mortgage at a rate 84% higher than white applicants, according to 2020 data from Zillow. Nationwide, 19.8% of Black applicants were denied a mortgage compared to 10.7% of white applicants, and states like Mississippi, Louisiana, Arkansas, and South Carolina reported the highest denial rates at 31%, 26.1%, 26%, and 25.8%, respectively.

Throughout the pandemic, households of color were more likely than white households to experience economic challenges like job or income losses, which made mortgage and rent payments unaffordable. The disproportionate impact of a pandemic-driven economic crisis made it more difficult for Black homeowners to close gaps in credit access, home values, and mortgage denial rates.

The Black homeownership rate has rebounded modestly from recent lows, but remains below its early 2000s peak as racial disparities in the mortgage and housing markets widened throughout the early part of the pandemic, according to a Zillow analysis of data from the Home Mortgage Disclosure Act (HMDA).

And while Black homeownership has risen to 44% currently from a recent low of 40.6% reached in Q2 2019, it remains far below the peak of 49.7% set in 2004. Meanwhile the access gap between Black and white mortgage applicants continues to grow, setting Black would-be homeowners farther back from well-established wealth- and community-building benefits of homeownership than their white peers. This is partly a result of longstanding income and credit disparities that only deepened during the pandemic.

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