Study: Black Home Buyers More Likely to Be Denied Mortgages

July 8, 2020

A new study suggests racial barriers to homeownership may be evident as early as the mortgage lending search. Black home buyers are being denied a mortgage at higher percentages than other home buyers, a new analysis from LendingTree finds. Researchers looked at mortgage denial rates between Black Americans and the overall population in the nation’s 50 largest metros.

Researchers found that, on average, Black home buyers are denied mortgages 12.64% of the time, 6.49 percentage points higher than the overall denial rate of 6.15%.

Even in areas such as counties with a majority of Black residents, the denial rate is disproportionately high for both Black home owners and home buyers, the study notes.

The cities with the largest disparities between the rate of Black home buyers denied mortgage loans compared to the overall rate for mortgage purchase loans are Milwaukee, St. Louis, and Cleveland, the study shows. On the other hand, the metros with the smallest spread are in Sacramento, Calif., Seattle, and San Diego.

Mortgage refinance loans also saw higher denial rates for Black homeowners than other applicants. Black applicants applying for refinances were denied mortgage refinance loans on average 30.22% of the time—13.5 percentage points higher than the overall denial rate of 17.07%.