Black homeowners lose about $14K over the life of a mortgage

Black homeowners lose an average of about $14,000 over the life of a mortgage and about $67,000 in retirement savings due to higher interest rates, according to the National Association of Real Estate Brokers eighth annual State of Housing in Black America report.

The analysis of 2019 HMDA data found that Black borrowers locked in an average mortgage rate of 4.44% for conventional loans — 15 basis points higher than white borrowers. Though not as stark, Black consumers paid higher average interest rates across all loan types compared to their white counterparts.

"The reality is white homeowners have gotten very specific benefits over time that accumulate," David Dworkin, president and CEO of the National Housing Conference, said on a NAREB-hosted call with fair housing advocatesthis week.

"One of the biggest ones is the 'daddy down payment loan.' If you're a multigenerational homeowner, your family has the wealth and resources to help you with your down payment,” Dworkin added. "This is not rocket science and this is not special treatment. This is saying we have given special treatment, we just want everybody to receive it now."

Multiple advocates posited that bridging that rift would require governmental intervention. Otherwise, it'll be more of the same: incremental bumps in homeownership during good economic times without real change and racial discrepancies holding steady.

"Let us be absolutely clear as a bell: the federal government in public policy created, aided and abetted the racial wealth and homeownership gap in America," Marc Morial, president and CEO of the National Urban League, said on the call. "The federal government is an essential element in trying to rectify and correct it. What we know from the last 40 years of public policy is it will require intentionality, not simply generalized policies."

The repercussions of the coronavirus unevenly affected housing for BIPOC communities. The fallout of unemployment from COVID-19 and possible subsequent lockdowns threaten to spread the racial wealth gap even further. That impact can already be seen in certain markets.

"The pandemic, if anything, showed the ugly face of the real economic divide in our country," Rep. Rashida Tlaib, D-Mich., said on the call. "Close to 13% of my Detroit residents reported being evicted. That's 88,000 folks without a home in one year. Michigan lost more Black homeownership than any other state in the country."

The racial divide in homeownership widened in the third quarter of 2020 as rates fell across all demographics, according to the Census Bureau.

The Black homeownership rate dropped to 46.4% after reaching a 16-year high of 47% in the second quarter. While it still marks an improvement from 42.7% year-over-year, Black homeownership has never hit 50%.

The overall U.S. homeownership rate crept down quarterly to 67.4% from 67.9% and while rising annually from 64.8%. Following the same pattern, white homeownership went to 75.8% from 76% in the second quarter and 73.4% a year ago, Hispanics went to 50.9% from 51.4% and 47.8% and all other races went to 58% from 59.3% and 56%.