Racial/Ethnic inequality & contemporary disparities in mortgage lending

Abstract

Research over the past two decades has noted significant racial/ethnic wealth inequalities—inequalities with important implications for life chances and institutional access. Home ownership is as a foundational element of such inequality with broad consequences for exposure to crime, quality of public safety services, and access to healthcare, education, and employment. Building on earlier scholarship that has tended to focus on specific forms of mortgages, we draw in this article on over 1.4 million diverse mortgage applications from the largest 100 U.S. metropolitan areas to interrogate racial/ethnic disparities for (1) all home types (mobile homes, condominiums, multi/single-family units), (2) all lien holders (private/government backed), (3) all purposes (vacation/rental/owner-occupied), and (4) all buyer loan sequences (purchase, refinance, home-equity/improvement). Our analyses, which make use of multilevel modeling, reveal durable inequalities for African Americans and Hispanics across time and advantages for Non-Hispanic White and Asian-American applicants. Such disadvantages are likewise observed for those seeking housing in highly concentrated minority locales, although such effects seem to vary by applicant race/ethnicity. Specifically, mortgage originations, while generally less likely in high minority concentrated areas, appear to be more likely for Black/Hispanic borrowers in areas that have been becoming increasingly minority concentrated. Mortgage lending, we conclude, remains a deeply problematic dimension of racial/ethnic inequality with important consequences for persistent segregation, wealth disparities, and the intergenerational transmission of advantage/disadvantage.