A new Northwestern University analysis finds that racial disparities in the mortgage market suggest that discrimination in loan denial and cost has not declined much over the previous 30 to 40 years. However, the study found that discrimination in the housing market has decreased during the same time period.
The authors found that incidents of overt discrimination – like telling a Black buyer that a home was no longer available when it was still on the market in order to steer the African American buyer to a different neighborhood – have declined significantly. However, in the mortgage market, the researchers found that racial gaps in loan denial have declined only slightly, and racial gaps in mortgage cost have not declined at all, suggesting persistent racial discrimination. Black borrowers are more likely to be rejected when they apply for a loan and are more likely to receive a high-cost mortgage.
Lincoln Quillian, a professor of sociology at Northwestern University and lead author of the study, stated that “it was distressing to find no evidence of reduced discrimination in the mortgage market over the last 35 years. Discrimination in the mortgage market makes it more difficult for minority households to build wealth through housing, contributing to racial wealth gaps. Discrimination in the housing market increases housing insecurity for minority households and contributes to persistent neighborhood segregation. These results help account for why black homeownership has not increased over the last 35 years.”
The full study, “Racial Discrimination in the U.S. Housing and Mortgage Lending Markets: A Quantitative Review of Trends, 1976-2016,” was published on the website of the journal Race and Social Problems. It may be accessed here.