Florida minority homeowners more often turn down mortgages, data shows

TAMPA, Fla. (WFLA) – In today’s housing market, owning a home is already difficult, especially for first-time home buyers. In the United States, minorities are less often approved for mortgages than their white neighbors, according to Zillow.

Zillow, a real estate company, studied mortgage denials across the country to see which demographics were most often denied mortgages. The company analyzed data from the Home Mortgage Disclosure Act during its research.

“The mortgage denial rate was 84% ​​higher for black applicants than for white applicants in 2020 (the latest year for which data is available), according to HMDA, compared to 74% in 2019. Nationally , 19.8% of black applicants were turned down for a mortgage in 2020, the highest among the races and well above the 10.7% of white applicants who are turned down,” according to data analyzed by Zillow from the HMDA .

Unlike credit card payments, student loans, or other types of consumer debt, home equity transforms from a sink of money into an asset of wealth over time for many. Americans.

As property values ​​rise and owners pay off their loans, ie mortgages, the market turns housing into an investment. Rising house prices are now increasing equity amounts for homeowners more quickly, as the shortage of homes available to buyers remains limited.

In Florida, the highest percentage of mortgage loan denials in 2020 were among Native American or Alaska Native homebuyers, with 22% of all applicants turned down. Black buyers followed closely behind, according to the Zillow report, with 21.8% seeing their mortgage application turned down.

“Before the pandemic, Black homeownership had already hit a record low of 40.6% in the second quarter of 2019,” according to CNBC.

US Census Bureau data showed that Pre-pandemic black owners had fallen to 40.6% in the second quarter of the fiscal year. By Q2 2020, the number of black homeowners had risen to 47%, but dropped again in Q2 2021 when the percentage fell again to 44.6%. In the second quarter of 2019, at the same time, 57.7% of Asians, Native Americans, Hawaiians and Pacific Islanders owned their homes. This number increased to 61.4% in the second quarter of 2020, but fell to 58.7% in the second quarter of 2021.

Over the past five years, from 2017 to 2021, black homeowners across the United States remained the demographic in the United States with the lowest percentage of homeowners among its population.

Hispanic families weren’t far behind, while non-Hispanic white families had the highest homeownership rates in the nation, at 71.8% or more, quarter-by-quarter.

Echoing a higher likelihood of homeownership among white families and homebuyers, Zillow’s study of HMDA data showed that, compared to all minority demographics, whites had the highest rate lowest mortgage rate at just 14.3% in Florida.

Zillow reported a similar gap trend in Tampa regarding the the rental charges families face. The study was published in October 2021, finding that black and Latino families spent a higher percentage of their monthly income on rent, meaning more households were burdened with rent compared to their white neighbors.

Mortgages have always been cheaper options than renting while providing financial equity for families.

Zillow’s study showed that households of color “were more likely to report experiencing housing and economic challenges as a result of the pandemic.” Black families were reportedly “more likely than whites to report loss of job or income and difficulty meeting mortgage or rent payments”, adding to the problem of mortgage denial. Mortgage approval is also affected by income, after all, a mortgage is a loan, and the ability to repay the loan has a significant effect on approval.

“Black homebuyer applicants in 2020 had a median income of $67,000, compared to an overall median of $83,000 for all applicants,” Zillow reported. “This may help explain why black mortgage applicants had smaller down payments in 2020 than applicants of other races.” Zillow also said the median property value of homes that black applicants attempted to purchase through a mortgage were generally lower than the property values ​​of all other applicants, on average.

“Black applicants also generally asked to buy cheaper homes in 2020 than applicants of other races – a median property value of $225,000 for black applicants and $275,000 for all applicants,” said reported Zillow. “The typical down payment for a black candidate was $16,600 less than the overall median down payment in 2020.”

Affordable housing issues are common in the United States, as material shortages and tight housing markets drive up prices for those trying to buy their first home or relocate.