Racial discrimination in the mortgage market hasn’t waned over past 4 decades

EVANSTON, III — Black or Hispanic families are still less likely to be approved for a mortgage, and if they are, it will likely be at a higher cost. That’s the finding of a study by Northwestern University researchers which concludes that racial disparities in the mortgage market have remained about the same over the past 30 to 40 years.

Study authors say that discriminatory practices in loan denial and cost are just as likely today as they were in the 1980s. However, the study did find some progress; discrimination in the housing market as a whole during the same time period has gone down.

The researchers came to these conclusions by performing a meta-analysis on studies that had examined racial bias in mortgage and housing lending among African-Americans, Latinos, and Asians. All available studies dating back to the late 1970s were included.

“We find declines in most forms of discrimination, especially the more extreme forms like falsely claiming an advertised unit is no longer available,” says lead author Lincoln Quillian, a professor of sociology at Northwestern, in a university release. “There is less reduction and considerable persisting discrimination in more subtle differences in treatment between whites and minorities.”

Quillian continues: “For example, in about 10% audits in which a white and an African-American auditor were sent to apply for the same unit after 2005, the white auditor was recommended more units than the African-American auditor. These trends hold in both the large HUD (Housing and Urban Development)-sponsored housing audits, which others have examined with similar findings to us, and in smaller correspondence studies.”

In the mortgage market, Quillian and his team found only marginal declines regarding racial gaps in loan denial, while racial differences in mortgage costs haven’t changed at all. Black and Latino borrowers are still more likely to have their loan applications denied or be offered a higher-cost mortgage.

Quillian says these persistent disparities make it more difficult for minority households to build and pass down wealth via property, increasing housing insecurity for minority families. As a result, black homeownership has remained stagnant.

He and his team conclude that anti-discrimination enforcement in the housing sector should not only continue but be strengthened. This will hopefully eliminate the racial disparities that black, Latino, Asian, and other communities of color face when pursuing homeownership.

The study is published in the journal Race and Social Problems.

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