Homeownership gap in the USA remains black and white

The homeownership gap between black and white households has remained the same for past 100 years in the USA, reveals new data from Zillow.

In 2015, 22.4 percent of black applicants were denied conventional loans according to data from the Home Mortgage Disclosure Act. In 2010, 30.5 percent of black applicants were denied. By comparison, 10.4 percent of all conventional loan applications were denied in 2015, a drop from 14.2 percent in 2010.

Indeed, white and Asian borrowers are more likely to be approved for a conventional loan than black or Hispanic borrowers. Among Hispanic applicants, 17.3 percent were denied in 2015, down from 25 percent in 2010. The disparity persists despite improvements in mortgage access for borrowers over the last few years.

“Even though conditions have improved over the past few years, getting approved for a mortgage is still a significant barrier for some would-be buyers,” said Zillow Chief Economist Dr. Svenja Gudell. “Owning a home is an important way for the middle class to build personal wealth. It’s encouraging to see more black and Hispanic borrowers getting approved for mortgages, but there’s still a lot of progress that needs to be made.”

The problem is so entrenched that Fannie Mae and Freddie Mac have recently announced programs designed to improve access to credit for these groups, which have historically had the lowest homeownership rates, even though they are more likely to place a higher value on owning a home.

According to the Zillow Housing Confidence Index, 68 percent of Hispanic respondents and 65 per cent of black respondents considered homeownership necessary to living the American Dream. By comparison, 59 per cent of white respondents and 58 per cent of Asian respondents felt the same.

Photo: Michael Patrick

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