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Racial/Ethnic inequality & contemporary disparities in mortgage lending
Meghan M O'Neil1, Vincent J Roscigno2
1School of Criminal Justice, Michigan State University, East Lansing, MI, United States of America.
Plos One
|January 14, 2025
Summary
Racial and ethnic minorities face persistent mortgage lending disparities, impacting wealth and opportunity. These inequalities in homeownership contribute to ongoing segregation and intergenerational disadvantage.
Area of Science:
- Socioeconomic research
- Urban studies
- Housing policy
Background:
- Significant racial/ethnic wealth inequalities exist, affecting life chances and institutional access.
- Homeownership is a key factor in wealth accumulation and access to resources like healthcare and education.
- Previous research often focused on specific mortgage types, limiting a comprehensive understanding of disparities.
Purpose of the Study:
- To investigate racial/ethnic disparities in mortgage applications across diverse home types, lien holders, purposes, and loan sequences.
- To analyze the impact of neighborhood racial/ethnic composition on mortgage lending outcomes.
- To identify persistent patterns of inequality in the mortgage market.
Main Methods:
- Analysis of over 1.4 million diverse mortgage applications from the largest 100 U.S. metropolitan areas.
- Utilized multilevel modeling to examine racial/ethnic disparities.
- Considered all home types, lien holders, purposes, and buyer loan sequences.
Main Results:
- Durable racial/ethnic inequalities were found, with African Americans and Hispanics facing disadvantages compared to Non-Hispanic Whites and Asian Americans.
- Disadvantages were also observed for applicants seeking housing in highly concentrated minority areas.
- Mortgage originations were less likely in high minority areas, but more likely for Black/Hispanic borrowers in increasingly minority-concentrated areas.
Conclusions:
- Mortgage lending remains a significant contributor to racial/ethnic inequality.
- These disparities perpetuate segregation, wealth gaps, and the intergenerational transmission of advantage/disadvantage.
- Addressing these lending inequalities is crucial for promoting equitable housing and economic opportunities.
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