Enacted by Congress in 1975, the Home Mortgage Disclosure Act (HMDA) requires an annual public accounting of the nation’s mortgage lending. Its data provides critical information for both the public and financial sectors by alerting the nation to trends on the groups of Americans that are actually receiving mortgage loans from financial institutions.
For the third straight year, CRL’s HMDA analysis finds that mortgage lending overall has not been affected by lending rules like the Ability-to-Repay and Qualified Mortgages, also known as QM. Instead, lending trends show incremental increases signaling modest growth in 2014, 2015, and again in 2016. In 2016, 2,123,000 conventional loans were approved. An additional 866,000 non-conventional loans were also made last year.
Despite these encouraging signs, consumers of color and low-wealth families still lack access to conventional loans. Consumers of color received a combined 187,958 conventional loans or 9% of 2016’s conventional mortgage loans. By contrast, 324,566 non-conventional mortgage loans were approved in 2016 for African-Americans and Hispanic Whites.
Another disturbing and continuing trend is the high rates of denial in mortgage applications filed by consumers of color. African-Americans still have the highest denial rate and Hispanic White applicants were also denied more often than Whites.
At a time when mortgage rates are at their lowest, it is important to the nation’s economy for all consumers to take advantage of historically low-interest rates. Broad access to the most cost-efficient mortgages would increase the strength of our still-recovering economy.
CRL believes that every consumer and community must be included in our nation’s economic progress.
Highlights From the 2016 HMDA Data
- African-American borrowers received 6% of total purchase loans. Hispanic white borrowers received 8.8% of purchase loans. This marks a slight increase from the corresponding 2015 totals, shown above, but these rates continue to lag the population rates for African-Americans and Hispanic white Americans, who make up 12.7% and 11.3% of the American population, according to the US Census Bureau's 2015 American Community Survey.
- African-American borrowers received 5% of total refinance loans. Hispanic white borrowers received 6.2% of purchase loans. While these totals mark small increases since 2015, the proportion of refinance loans to African-American borrowers remained at 5%, while the proportion to Hispanic white borrowers slightly decreased from the corresponding 2015 totals.
- Low- and moderate-income borrowers received 26.2% of purchase loans, a total of 907,306. This total is a small increase in volume from 2015 levels, but represents a smaller proportion of the total purchase loans than in 2015.
- While the share of government-backed purchase loans to African-American borrowers increased slightly, from 9.8% to 10.6% from 2015 to 2016, and from 13.2% to 13.6% to Hispanic white borrowers, these shares remained quite small in comparison to the share to non-Hispanic white borrowers, which remained above 60%. Moreover, the share of these loans to low- and moderate-income borrowers decreased from 37.9% to 35.0%.
- Similarly, African-American and Hispanic white borrowers made small gains in the conventional purchase market, where their disparities with non-Hispanic white borrowers are greater. Non-Hispanic white borrowers receive over 70% of the conventional purchase loans, with African-American borrowers receiving just over 3% and Hispanic white borrowers 5.8%-- out of over 2.1 million conventional purchase mortgage loans, only 65,451 went to African-Americans nationally. As in the government-backed market, low- and moderate-income borrowers saw their share of conventional purchase loans decrease in 2016, from 21.6% to 20.6%.
- Rates of higher-priced lending incidence were up slightly overall for purchase loans, from 7.6% to 7.7%, and slightly down, from 2.5% to 2% of refinance loans. Racial and ethnic disparities continue to exist in the higher-priced market, however, as African-American and Hispanic white borrowers are between two and three times as likely as non-Hispanic white borrowers to receive a higher-priced purchase loan.
- Non-bank lenders made 52.9% of the total 2016 originations, including 56.1% of the refinance originations.