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New ANHD white paper: Who Lends, Who Gets Loans
As much as New York City is a city of renters, nearly a third of New Yorkers own their own homes. Responsible, affordable homeownership has long been recognized as an important way for people to build wealth and move into the middle class. Yet, lower-income people and people of color have consistently been locked out of the housing market or targeted with harmful products and practices.
Who is Lending and Who is Getting Loans? Trends in 1-4 Family Lending in New York City
As much as New York City is a city of renters, nearly a third of New Yorkers own their own homes. Responsible, affordable homeownership has long been recognized as an important way for people to build wealth and move into the middle class. Yet, lower-income people and people of color have consistently been locked out of the housing market or targeted with harmful products and practices. From the decades prior to the passage of the Community Reinvestment Act (CRA) and Fair Housing laws when banks redlined communities of color to the more recent financial crisis when lenders were targeting these same populations with unscrupulous, high-cost loans.
Today, the pendulum seems to have swung back. Low- and moderate-income (LMI) New Yorkers and people of color face significant barriers to homeownership in NYC. This is due to both a lack of access to credit a and a lack of affordable inventory, coupled with the fact that these same populations very often lack the savings needed to purchase and maintain a home, especially when compared to their white and higher-income counterparts.
A new white paper released today by ANHD provides original analysis of Home Mortgage Disclosure Act (HMDA) data. It highlights recent trends in 1-4 family lending in NYC from 2012 to 2014:
- Home Purchase loans citywide declined by 7.7% from 2013-14, but are up 5.6% from 2012. The decline in refinance lending in the city mirrors national trends, as most homeowners had already taken advantage of historically low interest rates. On average, just 7.2% of home purchase loans went to low- and moderate-income borrowers in 2014, down from 7.5% in 2013.
- The share of lending by the "Big 4" banks (Chase, Citibank, Bank of America and Wells Fargo) in NYC has been steadily declining, from 50% of home purchase loans in 2011 to 45% in 2014.
- Non-CRA covered lenders are increasing their presence: In 2014, 29.4% of all home purchase loans were originated by non-CRA covered lenders, up from 22.6% in 2011. The percentage of non-CRA covered lenders was 45.4% for refinance loans in 2014.
- Racial disparities persist. 22% of New Yorkers are Black and 29% Latino, yet in 2014 only 8.76% of home purchase loans went to non-Hispanic Black Borrowers and 8.36% to Hispanic borrowers of any race. Similar disparities appear in the percentage of applications and denial rates.
Addressing these disparities will require a concerted effort on the part of government, banks, and bank regulators. This involves increasing the inventory of affordable homes to purchase, making credit available equitably and responsibly, increasing financial assistance, and increasing access to homeownership and financial counseling. It also means holding banks accountable for irresponsible practices that lock lower-income borrowers and people of color out of the housing market. The City and financial institutions, especially those covered by the CRA, have an obligation to ensure that this opportunity of homeownership is made equitably to lower-income and minority people and communities throughout the City.
Blog team: Benjamin Dulchin, Lena Afridi, Armando Chapelliquen, Jonathan Furlong, Emily Goldstein, Ericka Stallings, Jaime Weisberg, Barika X. Williams. Editors, Anne Troy, Abou-Baker Diakite