The ability to access credit and obtain a mortgage is significantly more challenging for would-be borrowers who are Black, Indigenous, People of Color, according to a Zillow analysis of the most recent data from the Home Mortgage Disclosure act.
Loan officers lean heavily on credit reporting — a metric typically disadvantageous for BIPOC. Historically, Black Americans have a higher likelihood of falling victim to predatory lending or not having any credit history at all, according to the Zillow report. The analysis found that Black applicants were denied mortgages at a rate that is 80% higher than white applicants.
"At a time when racism is at the front of many Americans' minds, the disparity in mortgage rate denials is yet another reminder that the housing market — and country — have not done enough to address inequities and heal the scars from an unjust past," Joshua Clark, economist at Zillow, said in a press release.
Black homeownership just rose
While the uptrend is encouraging, Black house hunters now face yet another obstacle in trying to attain the American Dream. Through presidential executive order on July 23, the Department of Housing and Urban Development
The Black community also has the lowest property value by race. Across the country, the average Black-owned house is worth $180,000, according to the Zillow Home Value Index. That compares to the U.S. average of $218,000 overall, $292,000 for Asians and Pacific Islanders, $233,000 for whites, and $187,000 for Latinx.
This incongruence stems from
"The mortgage approval process is rooted in a racially unjust history that persists to make homeownership a far more difficult dream to achieve for many Black Americans," Clark said. “Owning a home is a major way to generate, keep and pass down wealth, and unequal access to mortgages only serves to further entrench inequality."