The percentage of Americans who were denied a mortgage loan ticked down last year, according to a report released Thursday by real estate hub Zillow.
But sharp racial divides were still apparent, and a pending national interest rate increase – which will inherently make borrowing money more expensive – could weigh on mortgage applications going forward.
More than 2.1 million conventional mortgage applications were submitted in the U.S. last year, up more than 5 percent from 2013, according to Zillow. Of that group, only 11.2 percent were denied a loan, down from 2013’s 12.4 percent.
And of the more than 791,000 loan applications submitted separately to the Federal Housing Administration, only 16.6 percent were denied, an improvement of nearly 4.6 percent from the year before.
“Denial rates for primary mortgage applications were down across the board last year compared to 2013, particularly for black and Hispanic borrowers,” Skylar Olsen, a senior economist at Zillow, wrote in a research note Thursday.
Despite the year-over-year improvement, however, mortgage denial rates still vary widely by racial demographic. Only 9.4 percent of white applicants for conventional loans were denied in 2014, compared to 12.2 percent of Asian applicants, 18.8 percent of Hispanic applicants and 23.5 percent of black applicants.
It’s also worth noting that homeownership in general is and has historically been skewed toward white Americans. Though the national homeownership rate last year clocked in at 63.1 percent, according to the 2014 American Community Survey, the rate for whites was a whopping 71 percent. Black Americans’ homeownership rate last year was only 41.2 percent.