Study: Black Mortgage Applicants are Denied 84% More Often than White Applicants

  • In Business
  • 2022-01-15 00:30:00Z
  • By The Root
Photo: fizkes (Shutterstock)
Photo: fizkes (Shutterstock)  

Mortgage denial rate for Black applicants is 84 percent higher than for white applicants, according to data from Zillow in 2020, the most year the data was available. This is an increase from 2019 when the denial rate was 74 percent higher.

Are we surprised? No, but it is still frustrating as hell? Yes

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According to Zillow, 19. 8 percent of Black applicants were denied a mortgage, which is the highest for all race groups and 9 percentage points higher than white people. The states where rates were the highest were Mississippi (31 percent), Louisiana (26.1 percent), Arkansas (26 percent) and South Carolina (25.8 percent).

Sounds similar to the problem that Airbnb is having with hosts who deny potential Black guests because of how their name sounds.

Overall Black ownership is up at 44 percent, but it is still below the peaks it hit in the early 2000s. The highest being 49.7 percent in 2004.

We already knew that the coronavirus pandemic has disproportionately affected Black people when it comes to health. But this study also sheds light on how the pandemic has disproportionately affected Black people economically.

The study also found that Black applicants purchase less-expensive homes compared to any other race. In 2020, the median property value was $225,000 for Black applicants and $275,000 for all other applicants. Down payments from Black applicants were $16,600 less than the overall median down payment in 2020, according to Zillow.

The research claimed it could take another decade for Black applicants to have the same down payment as all applicants.

Ten years?! That just shows how large the disparity is between Black people and other races when it comes to homeownership. Assuming the proper effort is put in to ensure this gap decreases.

Bad credit equals a bad ownership rate.

While all of this data may seem negative, there are some positives to take from this study.

According to Zillow, Black-owned homes are increasing in value, in fact 1.5 percentage points more than all home values and is expected to increase at a pace of 0.8 percentage points above all home values by September 2022.

Still, it will also take more than two decades for the value of Black homes to reach the overall median.

We already knew the homeownership gap for Black people was low compared to other demographics in the United States. But what this study showed is that it will take an extreme amount of work and effort to ensure that there is equity among Black homeowners and all other groups.


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