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Home Loans & Finances

Black or Hispanic? Higher income doesn't help getting a mortgage

by | | Last Updated On September 15, 2017

Racial disparities in high-cost lending increase when income levels increase.

A new study released by the Washington-based National Community Reinvestment Coalition has concluded that in 2005 blacks in 171 metropolitan areas were at least twice as likely as whites to receive expensive loans.

The study anlayzed nationwide mortgage data collected by the Federal Reserve. Suprisingly, the report showed that the most effected were those with higher income levels, rather then lower ones.

Low-income blacks in all areas were more likely to have pricey loans than whites with similar incomes. What is the definition of a high-cost loan? mortgage whose rates are at least three percentage points above Treasury securities.

While this study was not able to attain creditworthiness by race and income, it is startling nonetheless that differences in high-cost lending increases as income levels increase. The finding would suggest that creditworthiness of minorities declines compred to whites as income level increases.

The study can be found here: "Income is No Sheild Against Racial Differences in Lending".


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