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Black Americans in areas like Ferguson, Missouri don't have access to the same lending as white Americans. Photograph by Justin Sullivan — Getty Images

Blacks Are Still Significantly Less Likely to Get Approved for a Mortgage than Whites

Jul 19, 2016

Black borrowers in cities like St. Louis, Missouri, and Milwaukee, Wisconsin, are less likely to get a mortgage than their white counterparts in similar economic situations, according to a new study by advocacy group the National Community Reinvestment Coalition (NCRC).

The study's authors looked closely at St. Louis and found that lending activity was highly correlated with race in the most segregated regions of St. Louis. "The City of St. Louis and its inner ring suburbs like Ferguson show strong indications of hypersegregation," they wrote. "There are many census tracts in which the population is 75%-to-98% African American—concentrated clusters of segregated neighborhoods. Within these areas less than one percent of homes received a home purchase loan for the 2012-2014 period."

What's more, some have argued that the anger that followed the killing of Michael Brown, an unarmed teen, by a police officer in Ferguson, was heightened by that that the St. Louis area has a high level of income inequality.

"This lack of lending is not fully explained by differences of income, meaning that credit is flowing more to neighborhoods with higher percentages of white residents with the same income profile," the report continued.

The study examined banks' lending habits for low- and moderate-income borrowers irrespective of race in St. Louis and surrounding areas. The level of both mortgage applications and approved mortgages steadily fell as the percentage of minorities in a region grew.

mortage disparities final NCRC

Previous analyses have also come to similar conclusions, highlighting that black and Hispanic Americans are far less likely to get a mortgage than white people or Asians.

A review of more than 38 million mortgage applications between 2007 and 2014 found that the percentage of mortgages approved for black people dropped to 5% from 8% over that time period.

Some banks in the past have argued that they find themselves in a bind when staring down potentially conflicting government mandates to reduce balance sheet risk while not discriminating against any one demographic group.

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