A new analysis reveals that despite rising Black homeownership rates, Black borrowers face significantly higher mortgage denial rates compared to other racial groups, highlighting a persistent racial gap in the housing market.
While Black homeownership rates in the U.S. are showing an upward trend, a concerning disparity persists between Black homeownership and that of other racial groups. A new analysis by LendingTree reveals that Black homebuyers face a significantly higher risk of mortgage denial compared to their counterparts. Black borrowers are 1.7 times more likely to be denied a mortgage than the average homebuyer, with nearly 20% of mortgage applications from Black homebuyers facing nationwide rejection.
The data underscores a persistent inequality, with denial rates for Black borrowers consistently outpacing those for all other borrowers. In 2022, the denial rate for all borrowers in the top 50 metropolitan areas stood at 9.14%, while Black borrowers experienced a denial rate of 14.44%. This trend continued into 2024, with an overall denial rate of 9.47% for all borrowers and 14.27% for Black borrowers. Nationwide, Black applicants faced a 19.00% denial rate in 2024, compared to 11.27% for all applicants – a stark 7.73 percentage point gap.Disparities are particularly pronounced in certain cities. Grand Rapids and Detroit, both located in Michigan, rank among cities with the most significant differences between Black and non-Black borrower denial rates, exceeding 20% in both cities. LendingTree attributes the primary reasons for mortgage denials, for both Black and non-Black borrowers, to debt-to-income ratios. However, credit history emerges as a more significant hurdle for Black applicants, playing a role in 33.16% of Black borrower denials compared to 24.85% of all denials – a gap of 8.31 points
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