Ethno-racial and relative income disparities in access to mortgage credit

The mortgage market is central to ethno-racial inequality in homeownership access. Previous studies demonstrate that unequal treatment of minorities is a major contributor to disparities in access and exclusion from low-cost mortgage loan products. While previous research has documented the disadvantages Latino and black homebuyers face, these studies have been limited in their assessment on the role of relative income in accessing a mortgage. In addition, previous research has used income as a proxy for credit worthiness, thus potentially overestimating and convoluting the role of income in access to mortgage credit. This study draws on annual data from the Home Mortgage Disclosure Act (HMDA) from 2018 and 2019 to assess ethno-racial disparities in mortgage outcomes by relative income levels. I demonstrate that high-cost loan originations and loan rejections are highest among Latinos and blacks across relative income levels compared to white applicants. The results for Asians are mixed. These trends are particularly troubling when examining high-cost loan originations, as middle and upper income Latinos and blacks perform similarly as low income whites. Implications for the ethno-racial wealth gap are discussed.