A new analysis reveals that while Black homeownership is increasing, the gap between Black homeownership and that of other races continues to widen. Black homebuyers are significantly more likely to be denied mortgages compared to other borrowers.
The homeownership rate among Black households in the U.S. is on an upward trajectory, but a concerning trend persists: the gap between Black homeownership and homeownership rates among other races continues to widen. A recent analysis by LendingTree reveals stark disparities in mortgage applications and approvals for Black homebuyers compared to their counterparts. According to the report, Black homebuyers face a significantly higher likelihood of mortgage denials . They are 1.
7 times more likely to be rejected for a mortgage than all homebuyers, translating to a nationwide denial rate of nearly 20% for Black mortgage applications. In 2022, the denial rate for all borrowers in the top 50 U.S. metropolitan areas stood at 9.14%, while Black borrowers experienced a denial rate of 14.44%. This gap persisted in 2024, with the overall denial rate for all borrowers reaching 9.47% and the denial rate for Black borrowers remaining at 14.27%. The disparity is particularly pronounced in certain cities. Grand Rapids and Detroit in Michigan top the list, with Black borrower denial rates exceeding 20% in both locations. LendingTree identifies compounding factors contributing to this inequity. While debt-to-income (DTI) ratios are a leading cause of mortgage denials for both Black and non-Black borrowers, credit history emerges as a more significant obstacle for Black applicants. In 2024, credit history played a role in 24.85% of all denials, compared to 33.16% of denials for Black borrowers, highlighting an 8.31-point gap
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