Recent HMDA Data Shows Growth in Lending In Allegheny County, But Persistent Racial Lending Gaps Remain
The Home Mortgage Disclosure Act (HMDA), which requires the majority of lending institutions in the United States to provide the federal government and the public with their yearly lending history, is now available. Because of the delay in the reporting and cleaning of the data, there is always a one year delay, meaning that 2015 is the most up-to-date mortgage lending information available. Allegheny County, which is the most racially and economically diverse county in the metropolitan area, continues to have significant disparities between who does and does not have access to capital.
If we compare 2015’s HMDA data to the prior year, it paints a picture of a thriving mortgage lending industry in Allegheny County. The total number of applications increased 28%, with an even more striking increase of 40% in home purchase loans specifically. The number of loans originated by banks in the County increased by nearly 13%, from just over 24,000 in 2014 to 27,300 in 2015. The total amount lent out by the banks increased in kind, from $3.89 billion in mortgage lending in 2014 to $4.24 billion. What these increases indicate is growing demand for home purchasing and refinance, but what is stimulating the demand is unlikely to be due to a single influence. Pittsburgh wages and unemployment remained fairly stable between those years, but other factors could be consumer confidence, improved bank outreach and/or lending products, and the supply and appeal of available housing stock.
One factor that failed to improve in 2015, and indeed, it hasn’t improved in over a decade, are the number of Blacks applying for and receiving loans. The 2015 HMDA data continued to reflect the realities of the wealth gap between Whites and Blacks in Western Pennsylvania. Of the $4.24 billion issued in mortgage loans in 2015, $117 million, or 2.75%, went to Black borrowers in our county. The Black origination rate, the percentage of Black loan applications that went on to be approved, was 46.9%; the rate for Whites was 63.3%.
One piece of good news for both White and Black borrowers is that the denial rate dropped significantly in the County, from 20% to 15.8% for Whites and from 43% to 31.6% for Blacks. What has remained the same is the proportion between the denial rates – the ratio of Black to White application denials has remained stubbornly at 2 to 1, a ratio that has barely changed in over a decade. While it is paramount that PCRG continue to call on banks to meet (and exceed) their CRA obligations regarding lending to minorities and LMI borrowers, we all must confront the persistence of Black poverty in Allegheny County. It is low wages, lack of access to good jobs, and credit history issues that exclude Black Pittsburghers from even applying, much less qualifying, to own a home of their own.